Do I have to pay capital gains tax when I downsize?

Downsizing triggers a capital gains question only if the sale price of the old home exceeds its tax basis by more than the exclusion available to an owner-occupant who lived there long enough to qualify. Most longtime homeowners in a rising market do see some gain, though a meaningful portion is typically excludable under federal rules before any tax is owed. The exact numbers depend on purchase price, improvements and sale price, so a CPA should calculate it using accurate inputs.