Paying off HELOC to avoir Taxes

[Aline Elad]

Hello All,

We recently bought a new primary residence using a HELOC and we now plan on selling our former one. We've never rented it so it cannot be claimed as a rental in the sale. The house is worth $850K with a mortgage balance of $350k and a HELOC of $200K (used).
- Can we claim after the sale that we’ve made $850k - $350k - $200k = $300K or does IRS not consider the HELOC in the sale please?

- Is it possible to avoid paying taxes if we just re-invest all the money to pay down the principal on the new mortgage (residential)?

TIA!