Hi, @LMK60 , thanks for the question!
I suppose the big question is whether or not you are able to exclude some or all of the gain from the sale. This article goes into those details. But in a nutshell:
- If you owned and lived in the place for two of the five years before the sale, then up to $250,000 of profit is tax-free.
- If you are married and file a joint return, the tax-free amount doubles to $500,000.
Additionally, you will need to report your rental income and expenses. And finally, there are a few states that may offer a deduction for the amount you paid in rent, so it's worth checking if your state is one of them! (If you're using TurboTax, it will ask if you paid rent when you're completing your state return.)
Hope this helps, please let me know if this raises additional questions!
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