For instance, suppose you bought your first home for $100,000 in 1985 and later sold it for $170,000. In 1995, you rolled that $70,000 profit from the sale into another home costing $300,000, which you now want to sell. Any profits are figured on the "basis" in your home [the purchase price of $300,000 minus the rollover of $70,000, or $230,000]. So if you now sell for $500,000, your profit is $270,000. On a home bought after 1997, each sale is looked upon as an independent event. If you bought in 1998, sold in 2001, and plan to sell again in 2004, profits from your earlier sale don't have anything to do with your next one.