Deferring taxes on profits from sale of primary residence?

[Neil Smith]

I have a potential client who owns a home in Boulder that is their primary residence and it worth ~$1.3M and they have >$500K of equity in the property. They're wondering if they sell and put all of the proceeds of the sale into another primary residence, do they still have to pay taxes on the profits from the sale that exceed $500K? They would utilize provision 121 and not pay taxes on the first $500K.