It is a potentially taxable transaction; however, if you lived there for any 24 out of the last 60 months, then you are eligible to exclude the gain. TO EXCLUDE GAIN ON THE DISPOSITION OF A HOME from
income under IRC section 121, a taxpayer must own and occupy the
property as a principal residence for two of the five years
immediately before the sale. ... The law permits a maximum gain
exclusion of $250,000 ($500,000 for certain married taxpayers).
