Sold a home, what should I expect to pay in taxes when we file?

[champton89]

Sold a home and am banking on our profit in a high yield savings account.

However, how much in taxes are we going to have to pay in the profit of our sale? Also, would the interest earned on that be tax deductible at all?

If we put that money into the down payment of another house, is that still incur taxes?

Thanks for the help!

[carminered2019]

Primary home for a couple, the first 500K of gain will not be taxed and anything above that will be taxed at 15% federal assuming you lived in the house for more than 2 years.

Best is to do a 1031 exchange depending on how much gain you have.

[FiveK]

Was this always your primary home, or did you ever rent it out, or...?

[fyre4ce]

Was it your primary residence? If so, up to $250,000 (single) or $500,000 (married) of gains on the home are excluded from taxation. Basically, you would need to have owned and lived in the home for at least 2 out of the last 5 years to qualify. See IRS Publication 523 for details.

If you had more than this gain, you will pay capital gains taxes at long-term rates on the excess. If it was your primary home, there is no way to do a 1031 exchange; that only applies to rental properties. Pay the tax and move on; you made a great profit.

If it was a rental property, there is no capital gains exclusion, but you can do a 1031 exchange. I wouldn't do it just for the tax benefit though, only if buying another rental property really makes sense for your overall situation.

Once you deposit the profits in a high-yield savings account, there is no special tax treatment on the interest earned from that account. The IRS doesn't care where the money came from. All the interest you earn will be taxable at the federal level at ordinary income tax rates (and by your state too if they have an income tax).

Hope that helps.

[pizzy]

Primary home for a couple, the first 500K of gain will not be taxed and anything above that will be taxed at 15% federal assuming you lived in the house for more than 2 years.

Best is to do a 1031 exchange depending on how much gain you have.

Can you 1031 a primary residence?

[GMCZ71]

Welcome to the forum.

All 7 of your posts have to do with this house sale but in different threads. To get the best answers less in more.

[champton89]

Thanks all for the replies. It was indeed a primary residence, lived in for 3 years. So we would just be paying taxes on the interest earned in the HYSA, based on the answers provided