Selling a primary residence can generate capital gains - but the good news is that there is an exclusion, called a Section 121 Exclusion, that can allow you to exclude up to $250,000 of the gain ($500,000 on a married filing joint return) from federal taxable income.
In general, to qualify for the Section 121 exclusion, you must meet both the ownership test and the use test. You're eligible for the exclusion if you have owned and used your home as your main home for at least two years out of the five years prior to its date of sale. Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another primary residence during the two-year period prior to the sale of this home.
Your question stated that you lived in the home for the last 10 years - so I presume it was your primary residence and therefore you met the use test. So, as long as you also owed it for at least two of the last five years, and have not excluded the gain on the sale of another home in the last two years, you will meet the rules and can exclude on your federal tax return a gain up to $250,000 or $500,000, depending on your filing status.
Note that there is no requirement to purchase another home in order to qualify for this exclusion.
Selling a primary residence can generate capital gains - but the good news is that there is an exclusion, called a Section 121 Exclusion, that can allow you to exclude up to $250,000 of the gain ($500,000 on a married filing joint return) from federal taxable income.
In general, to qualify for the Section 121 exclusion, you must meet both the ownership test and the use test. You're eligible for the exclusion if you have owned and used your home as your main home for at least two years out of the five years prior to its date of sale. Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another primary residence during the two-year period prior to the sale of this home.
Your question stated that you lived in the home for the last 10 years - so I presume it was your primary residence and therefore you met the use test. So, as long as you also owed it for at least two of the last five years, and have not excluded the gain on the sale of another home in the last two years, you will meet the rules and can exclude on your federal tax return a gain up to $250,000 or $500,000, depending on your filing status.
Note that there is no requirement to purchase another home in order to qualify for this exclusion.