Whether capital gains are applied to a home sale is based on you owning and living in the home at least 2 of the last 5 years, not what you did with the funds after the sale.
A 1031 exchange can be done with investment real estate only and needs to be arranged before closing.
There was a time when a homeowner could defer capital gains by purchasing a home that was of greater value than the one they sold, but that ended in 1997.
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