I sold my primary residence that i lived in for 6 years. i live in massachusetts. profits going to redoing basement of parents. do i pay capital gains & how much (%)?

[DoninGA]

If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).

If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported. You will need the online TurboTax Premier or Self-Employed edition to report the sale if you are using the online editions. Make sure that you indicate that you want the sale of the home reported on your tax return.

• Click on Federal Taxes (Personal using Home and Business)
• Click on Wages and Income (Personal Income using Home and Business)
• Click on I'll choose what I work on (if shown)
• Scroll down to Less Common Income
• On Sale of Home (gain or loss), click the start or update button

Or enter sale of home in the Search box located in the upper right of the program screen. Click on Jump to sale of home

[Opus 17]

First, what is your capital gain.

Your gain is the difference between the selling price and the adjusted cost basis.  You can reduce the selling price by the transactional costs of selling (real estate commission, transfer taxes, inspections you pay).  Your adjusted cost basis is the price you paid for the home, plus any permanent improvements, minus any depreciation you took or could have taken for business use of the home.  (Repairs are not improvements.)  

Then, if you lived in the home as your main home for at least 2 years of the past 5 years, you can exclude the first $250,000 of gain (or $500,000 if married filing jointly).  If you have more gain than that, it will be taxed at 15% or 20% depending on your other income.  (Plus state income tax.)

If your gain is less than your exclusion, and if you did not get a 1099-S form at the closing, you don't even have to report it on your return.  If you did get a form 1099-S (no matter what your gain is) or if your gain is more than the exclusion amount, you must report it.

[Hal_Al]

Note that what you did with the proceeds of the sale is not relevant.  if you meet the 2 of 5 year rule, you may exclude the capital gain, up to the limits.  

In the "old days" there was a rule that you had to reinvest the money in a new home.  That has not been the case since 1997.