Capital Gains Tax for primary residence

[Aaron Raymond]

My parents are considering selling their property that is paid off, and the estimated value is probably around $400,000. They want to down size to a property worth $250,000. Will there be any capital gains tax associated with this sale? Is there any way to avoid without a 1031 exchange?

[Matt Devincenzo]

Assuming they lived there 2 out of the last five years then they qualify for a Section 121 exclusion. That is $250K for single, $500K for married so it sounds like they'd be under that and eligible for a full exclusion on the gain and no taxes owed.