In 2016 I purchased a new house and sold my old one. Why is Turbo Tax telling me that I have to pay taxes on the profit of my old home?

[cmcda00-]

Shouldn't the profit from the old home be subtracted from the cost basis of my new home?  Otherwise, I'm told I owe $5000 in taxes.

[jerry2000]

Absolutely not. The ability to defer capital gains from selling a house by buying another one was removed from the tax code in 1997. Since that time, you can not defer capital gains on a home by buying one of equal or greater value. What you can do, if you owned and lived in the home for 2 of the 5 years ending on the sale date, is to not have to pay tax on a gain of up to $250,000 (Single), or $500,000 (Married Filing Jointly). Note that if you ever used the home as a rental, then the exclusion does not apply to any gain equal to the depreciation that you claimed or could have claimed.
For further info, see IRS Pubs, 530, 523, and 17
http://www.irs.gov/pub/irs-pdf/p530.pdf
http://www.irs.gov/pub/irs-pdf/p523.pdf
http://www.irs.gov/pub/irs-pdf/p17.pdf

[cmcda00-]

So where do I enter the cost of my new home so I can defer that tax?

[jerry2000]

You can not defer the tax because of the new home. There is no place to enter it because it does not defer the tax and has not since 1997. Read the answer again.