Q: We are planning to sell our home and expect to have a $30,000 profit. If we don’t use any of it for a down payment on a new home, will we have to pay taxes on our profit?
A: If you’re single, you can keep up to the first $250,000 ($500,000 if you’re married) in profits tax free as long as you’ve lived in your home for two of the past five years. The gain does not need to be reported to the IRS unless you exceed the $250,000 or $500,000 level in profits. However, you may only take the exclusion once every 24 months.
Published: Mar 1, 2001