<prompt> Human: I posted this to rtaxes, but I figured this subreddit may also be a good place to go for help. Just to clarify, she owes a million on the house and originally put 1.2 million into it, so selling it for 2 million is considered 800k profit although she will keep 1 million excluding taxes.I know that if you live in a home you can qualify to have either the first 250k or first 500k be non-taxable, but how do we know whether she qualifies for the 250k or 500k? Also, lets say that we get 500k non-taxable and we put the remaining 500k into a house - does putting 500k into the house allow us to avoid getting the money taxed all together - or would that 500k that we put into the house count as the non-taxable profit?Just to add: she has lived there for 17 years and married a man from Italy 19 months ago.  <response>: With that much money on the line go talk to a CPA. Its worth paying for that information, especially in this circumstance. 