Q. Is that money taxed?
A. Yes, usually. You effectively have the sale of a capital asset.
But, there is an exception for the sale of your principal residence. Technically, you are allowed to exclude the the capital gain if you lived in the home for at least two of the five years prior to the transaction date. There is an exception to the two year rule for a divorce/breakup. So if you lived in the home for a least 5 months, you do not have to report the sale/transaction, for your $50K exclusion*.
If you received a form 1099-S, reply back for instructions.
* Reply back, if your interested in the exclusion calculation.
