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Will I need to pay taxes on the sale of my home?

I purchased the house in 2016 and will be selling it as of December 2019.  It has been my primary residence.  I stand to make $50,000 on the sale of the home.  I plan to use that money to repay debts (credit card and student loans) rather than reinvest any of it in a new house.  Will I have to pay taxes eventually because it's not being reinvested?  Will the $50,000 be considered income?
3 Replies
Employee Tax Expert

Will I need to pay taxes on the sale of my home?

You don't have to reinvest the proceeds for gain exclusion on the sale of a primary residence.Below are some of the rules to exclude the gain on a primary residence.

  • Ownership: You must have owned the home for at least two years (730 days or 24 full months) during the five years prior to the date of your sale. It doesn't have to be continuous, nor does it have to be the two years immediately preceding the sale. If you lived in a house for a decade as your primary residence, then rented it out for two years prior to the sale, for example, you would still qualify under this test.
  • Use: You must have used the home you are selling as your principal residence for at least two of the five years prior to the date of sale.
  • Timing: You have not excluded the gain on the sale of another home within two years prior to this sale.

Please see Tax Aspects of Home Ownership: Selling a Home for rules and conditions to exclude the gain.

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Level 15

Will I need to pay taxes on the sale of my home?

based on your statements you seem to meet all the requirements  except one to exclude gain up to $250,000. 

if you haven't used the exclusion in the past two years, you meet that test as well.   

if your state has an income tax its rules may be different.  , 

Level 15

Will I need to pay taxes on the sale of my home?

What you do with the money after the sale is irrelevant--it has been irrelevant since 1997.




If your gain was more than  $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return.  Whether you re-invested the gain in to another house is irrelevant.  If you  have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)

If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**