In a broad sense, you do have $250,000 exlusion form capital gains when selling your home, so netting $100,000 is well within that limit. This is only general guideline.
But everything is in the details, especially with IRS. I will consult an accountant with all the details to make sure you don't have to pay tax on the gain.
The federal capital gains tax exemption allows for an exemption of $250,000 for a single person and $500,000 for a couple. The rules are as follows:
You must live in the home as your primary residence for 2 out of the last 5 years.
The purchase price of your home, including some transaction costs, is deducted from your sale price less some transaction costs. You then deduct capital improvements from this amount. If it is less than the exemption amount that applies, then you have no capital gains tax to pay. If it is greater, then you have to pay capital gains tax on the amount above the exemption amount.
Buy a property in 2005 for $300,000 including transaction costs
Sell the property for $700,000 in 2008, including transaction costs
While you owed it, you replaced the roof for $30,000
Less Purchase $300,000
Less Capital imp. $30,000
Capital gain of $370,000
Exemption of $250,000 (assuming it was your home that you lived in and that you are single)
Taxable capital gain $120,000
I hope this helps you and other with similar questions. Contact me if you need a referral for an accountant.
You need to speak with a CPA that is familiar with your personal financial situation. Your are taxed on the gain from the sale (not the profit). Based on your income level and other financial aspects, you may not have to pay anything.
Ask your tax professional.