My wife and I are selling our house and not sure if our profit from the sale of the house if taxed.

[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 and owned 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.

[jameschamp]

We have owned and lived in the home for about 7 years and our gains are less than 250,000. Does that mean still apply to us? I guess I am confused about the "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" part.

[DoninGA]

That rules are such that you must have lived in the home for at least two years in the five year period before sale.  If you had owned the home but did not live in it, such as using it as a rental, for less than two years then the eligibility for the exclusion would not apply.
Since you have lived in and owed the home for seven years then you are eligible for the exclusion from capital gains.

[jameschamp]

Thank you! That is very helpful.