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It no longer matters to you what you do with the proceeds from the sale of your house. As long as this is your principal residence (i.e., you've lived there at least 2 of the preceding 5 years as your principal residence), then under Section 121 of the Internal Revenue Code, you can exclude up to $500,000 in gain from sale if you are a married couple (it's $250,000 if single). So, if your gain is $410,000, you will be able to exclude all the gain and will have no tax resulting from your sale.
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