Do I Have to Pay Tax after Selling my Second House and Pay for the First House?

[Pitou]

I have owned two houses. I am about to sell my second house, which has been my primary residence for more than five years. I plan to use the $50,000 earnings from this sale to pay for my first house, which has been rented. At the end of the year, do I have to pay tax on the $50,000 earnings?

[MinhT1 · Accepted solution]

If you have lived for at least 2 years in the last 5 years before you sold the house, then you are eligible for the $250,000 capital gain exclusion (or $500,000 if married filing jointly). Your gain of $50,000 is thus not taxable.

As the capital gain is below this threshold, you do not have to report the sale on your tax return, except if you receive a form 1099-S in which case you have to report the sale but the capital gain will be excluded from taxation.

Please read this IRS document for more information.

[Mike9241]

"I am about to sell my second house, which has been my primary residence for more than five years." in this case it would seem the "second" house is actually your primary residence and since you owned and occupied it as you primary residence for 2 out of 5 year before the sale, you should beentilted to a home sale exclsuionn of $250,000