We sold our primary residence to move to a better primary residence will I need to pay taxes on the profit?

[Lucero Sanchez]

In 2012 we purchased our primary residence for $60k it was a short sale and we bought it with out any loans, a year in a half later we found a larger home in a nicer area also a short sale for $157k, by that time our primary residence was now appraised for $138k, so we sold it, we found a private lender to lend us the difference so we could buy the short sale cash. So every penny from the sale of our first primary residence plus what the lender let us barrow went straight towards the purchase of our new primary residence. A few days ago I received a 1099s from title company for $138k, will I need to pay taxes on that amount or the profit we made on the first primary residence $60k - $138K = $78k profit which went straight to our new primary residence?

[Steven Hamilton II]

Originally posted by @Lucero Sanchez:

In 2012 we purchased our primary residence for $60k it was a short sale and we bought it with out any loans, a year in a half later we found a larger home in a nicer area also a short sale for $157k, by that time our primary residence was now appraised for $138k, so we sold it, we found a private lender to lend us the difference so we could buy the short sale cash. So every penny from the sale of our first primary residence plus what the lender let us barrow went straight towards the purchase of our new primary residence. A few days ago I received a 1099s from title company for $138k, will I need to pay taxes on that amount or the profit we made on the first primary residence $60k - $138K = $78k profit which went straight to our new primary residence?

If you did not live at the first property for a full 730 days you WILL pay taxes on it even though you purchased another property right away.

Less than one year: Short term capital gains

Greater than one year but less than 2 full years residing there: Long term capital gains

Greater than 730 days: First 250k of gain excluded from income (500k if married and filing jointly). Any additional beyond that would be long term capital gains.

Also, it is called the Section 121 Exclusion( aka: Home Sale exclusion)

-Steven