I have sold my house and escrow is going to close by the end of the year.

Unfortunately, I am looking for a new one now but the sale won't go through until next year.

Are there any tax issues that I need to be aware of?

Am I going to be taxed on the money from the old home that is going towards my new home?

This is my primary home - I am not renting or anything, just living there.

I am selling it for more (25%) than what I originally bought it for 8 years ago.

  • 1
    Normally the sale of a primary residence does not carry any tax liabilities with it. However, you should include a country/state tag just in case there are exceptions.
    – not-nick
    Commented Dec 2, 2016 at 19:01
  • 1
    Tax questions almost always require you to specify your location. We have many country tags. Commented Dec 2, 2016 at 19:09

2 Answers 2


When you sell your primary residence, you are required to capitalize any loss or gain at that point; you do not carry over your loss or gain (as you might in an investment property). As such, the timing of the purchase of the next house is not relevant in this discussion: you gained however much you gained already. This changed from the other (rollover) method in 1997 (see this bankrate article for more details.)

However, as discussed in IRS Tax Topic 701, you can exclude up to $250,000 (single or filing separately) or $500,000 (married filing jointly) of gain if it is your primary residence and meets a few requirements (mostly, that you owned it for at least 2 years in the past 5 years, and similarly used it as your main home for at least 2 years of the past 5 years). So given you reported 25% gain, as long as your house is under a million dollars or so, you're fine (and if it's over a million dollars, you probably should be paying a CPA for this stuff).

For California state tax, it looks like it is the same (see this Turbotax forum answer for a good explanation and links to this California Franchise Tax Board guide which confirms it:

For sale or exchanges after May 6, 1997, federal law allows an exclusion of gain on the sale of a personal residence in the amount of $250,000 ($500,000 if married filing jointly). The taxpayer must have owned and occupied the residence as a principal residence for at least 2 of the 5 years before the sale. California conforms to this provision. However, California taxpayers who served in the Peace Corps during the 5 year period ending on the date of the sale may reduce the 2 year period by the period of service, not to exceed 18 months.


To your first question: YES.
Capital gains and losses on real-estate are treated differently than income. Note here for exact IRS standards.
The IRS will not care about percentage change but historical (recorded) amounts.

To your second question: NO
Are you taxed when buying a new stock? No. But be sure to record the price paid for the house. Note here for more questions.

*Always consult a CPA for tax advice on federal tax returns.

  • I don't think this really answers the question - OP is asking a much more specific question than this seems to answer.
    – Joe
    Commented Dec 2, 2016 at 22:27

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