ANSWERS: 2
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I think any time you sell a home and don't use the money to purchase/upgrade another home you have to pay capital gains. When we moved when I was 9, my parents got about 19k more for the house they sold than they paid for the new one. So they had to put that into landscaping etc or pay taxes on it.
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If the house was left to you in a will then you will only pay capital gains on the difference between the fair market value on the day the owner died and the selling price minus selling costs. So if the house was worth $200,000 the day the owner who left it to you died and you sell it say 7 months later for $210,000 and paid a realtor $5,000 to sell it then your capital gains would be 15% x $5,000. This is known as "stepped up basis".
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