Sold house and bought house. Had a 1st of 108k and a 2nd of 300k. Combined mortgage 408k. Used 2nd to buy house. 1st house sold for 490k. Will I owe taxes on 1st house?

[xmasbaby0]

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).

• If you are using online TT, you need Premier or Self-Employed software to report the 1099-S

[DoninGA]

The mortgage you had on the home that is sold is not relevant in computing the gain or loss on the sale.

Gain or Loss = Sales Price minus Selling expenses minus Adjusted Basis of the Home (Purchase price plus the cost of improvements to the home prior to the sale)

[Opus 17]

All the rules you need are in publication 523.

https://www.irs.gov/forms-pubs/about-publication-523

Your mortgages are irrelevant to your gain or taxes, and what you did with the money is irrelevant.

You owe capital gains tax on your capital gain, which is the difference between the selling price and your purchase price (plus certain allowable adjustments as described in publication 523).  Suppose you bought the first house for $200,000.  You have a $290,000 capital gain.  The fact that you only got $82K cash (or less due to commission) just means that you got most of your gain out early in the form of the second mortgage, which you didn't pay tax on.

If you owned the home at least 2 years and lived in it as your main home for at least 2 of the past 5 years, the first $250,000 of capital gain is excluded from your income (or $500,000 if married filing jointly).  Any gain more than your exclusion is taxable. It doesn't matter that you bought another house.