can the money you make on a house sale be spent on a new house without paying taxes?

Answer 1

I am assuming this is your main home.

Have you owned and lived there for two of the last five years? If so, then up to $250,000 of the gain ($500,000 if married) is tax-free. So you can spend it on anything without paying taxes.

There is a partial amount tax-exempt if you sell your home to move to another job and for a few other reasons and have lived in the house for less than two years.

If the conditions above are not met, then the gain on the home will be capital gains, and you will owe taxes no matter how you spend the money. Re-investing in a new home will not defer the taxes.

Answer 2

You don't have to put the money back into another house any more to be exempt from taxes. That rule went out a couple years back. There is also no age restriction any more.

Under the new rules, if you owned your house for two of the five years immediately prior to the sale, and lived in it for at least two of the five years immediately before the sale, the first $250,000 of profit ($500,000 if married filing joint) is exempt from taxes. You can do this as long as you haven't taken the exemption in the last two years.

Answer 3

If it is your personal residence and you have lived there for 2 of the last five years you can exclude $250,000 of the gain. Where you spend that gain is not of issue.