Do I pay capital gains tax when I sell the house I have lived in for 40 years?

Forty years of ownership can mean substantial appreciation, so federal capital gains tax is worth planning for, though the tax code provides an exclusion for a primary residence you have owned and lived in long enough to qualify. Whether that exclusion covers your full gain depends on your purchase price, improvements and current value. A CPA can calculate your actual exposure before you list, rather than guessing at a number.