Legal Question in Tax Law in Massachusetts

Re: Tax on Sale of Home

I am assuming you are selling your home not a house held for investment. The rule on reimvestment and deferral of gain on sale of your residece no longer exists under federal tax law. There is an exclusion of $250,000 of profit for a single person or $500,000 of profit for a married couple, before Capital Gains tax is applied. To be treated as a primary residence you must have lived in the home as your primary residence for at least 2 of the last 5 years.

So if you paid $300,000 for the home originally, and sold it for $580,000 and paid $30,000 as commissions and other expenses, your profit would be $250,000 and there is no federal tax on the profit. You are not required to reinvest the money in a home. If you the facts were the same but there was only a $10,000 commisson and other expenses, then you would pay as a single person a capital gains tax on $20,000.

Good luck with your sale.