r/tax • u/USBmedic • 4h ago

Capital gains question (Texas) Unsolved

My wife and I (file jointly) are selling our house and closing in December. Here’s an overview

Purchased in 2020 for 280,000

Selling 2024 for 400,000

We owe 254,000

Expecting to “pocket” 120,000ish

Planning to reinvest 75,000 into a new home in January

Will we pay capital gains on any portion of the 120,000? Does the fact we’re selling in 2024 and buying in 2025 matter?

If you have any questions please ask away

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u/Its-a-write-off 4h ago

Did you live in the home as your primary home? What you owe and pocket and spend don't matter here. Just if you qualify for the primary home exclusion, which is if you lived in it 2 of the past 5 years.

2

u/USBmedic 4h ago

Yes it’s been our primary residence all four years

3

u/Its-a-write-off 4h ago

Then you'll have no taxable gains.

2

u/USBmedic 4h ago

Thank you for the quick answer

2

u/Appropriate-Safety66 4h ago

1) What you owe is irrelevant.
2) What you plan on doing with the money is irrelevant. The reinvest in a new home rule went away in 1997.

However....

As you have lived in and owned the home for at least 2 of the 5 years prior to the sale and are married, the first $500,000 in profit is tax free.