Capitol gains tax on primary residence home sale

[ajreina1979]

I am selling my home in Texas which is my primary residence and only home I own.  If I make a profit on my home sale and buy a new home in the same state that is more expensive than the current home, do I still have to pay capitol gains tax and is there a limit on how much profit I can make on a primary home sale before I have to pay capitol gains tax.  For a simple example - I still owe 200k on my mortgage for home A and I sell home A for 450k for a 250k profit.  I then buy home B for 350k so I still have 100k profit leftover from the Sale of home A.  Do I have to pay capitol gains tax on the 100k leftover profit?  What options do I have to avoid paying capital gains tax? 

[lisah4]

Hi! 

I have included a link for your information on capital gains tax from the sale of your home that should help you with the questions you have asked. With the example you included if you

1. You owned the home for a total of at least two years in the five-year period before the sale.
2. You used the home as your primary residence for a total of at least two years in that same five-year period.
3. You haven't excluded the gain from another home sale in the two-year period before the sale.

You can exclude up to $250,000 of your gain if you're single, $500,000 if you're married filing jointly.

https://turbotax.intuit.com/tax-tips/investments-and-taxes/5-things-you-should-know-about-capital-ga...

Thanks ! 

Lisa , EA

[NateTheGrEAt]

To add to the excellent answer you already received, be aware that your mortgage balance doesn't enter into the calculation of your gain on the sale. 

Your gain is calculated as your sales price, minus sales expenses (things like title costs, real estate commissions, etc.), minus your basis. Your basis is what you originally paid for the house, plus costs incurred over the years of ownership for improvements, and some of your original closing costs. 

[DemiW]

Greetings @ajreina1979  and Congratulations on your new home!

Awesome information was provided above.  The great news is that TurboTax walks you through reporting the sale of your home.  Please note that if you received a Form 1099-S for the sale either with a gain or loss, you must report the sale.  You can use TurboTax Premier Online or Desktop to do so.

• Click on Federal Taxes (Personal using Home and Business)
• Click on Wages and Income (Personal Income using Home and Business)
• Click on I'll choose what I work on (if shown)
• Scroll down to Less Common Income
• On Sale of Home (gain or loss), click the start or update button

Or enter sale of home in the Search box located in the upper right of the program screen.  Click on Jump to sale of home

Again @ajreina1979 Congratulations!

[ajreina1979]

Thank you!