Seller will pay taxes between what they paid for the home and what they've sold the home for.
However, there are some considerations and an easy way to
Understanding Capital Gains in Real Estate
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Capital gains are based not on what a seller paid for the home but on its adjusted cost bases.
Here is how to calculate the gains calculating the gain
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Step #1
- What is the sale price? _________________________
- What is the total adjustment?____________________
- Find out by adding:
- What did it cost to purchase the home- including transfer fees, attorney fess, inspections (omit the points you paid for the loan.)
- What did it cost to sale( Cost of Sale) Including inspection attorney fees, real estate commission and money you spent to fix up your home prior to sale
- What did it cost in improvements(cost of improvements) including room additions, deck, etc.
- Keep in mind, don't include repairing or replacing something that was there already, (such as putting on a new roof or buying a new furnace)
Add the total home purchase + homes adjusted cost bases
( what the sold the home for)+ the adjustments(the cost of the purchase)+Cost of Sale, Cost of Improvements =Adjusted Cost
Your Capital Gain:
Subtract the Adjusted cost basis from the amount the home sells for to get your capital gains
Some Exemption for Capital Gains:
Since 1997, up to $250,000 in capital gain ( $500,000 for a married couple on the sale of a home is exempt from taxation if you meet certain criteria;
- You lived in the home as a primary resident for two out of 5 years
- You have not sold or transfer a home during the two years preceding the sale
- You had unforeseen circumstances such as: job loss, divorce family medical emergency.
Source information comes from Realtor Magazine Online.
Thinking about sell your property?.
Mary Beth Nunez will be happy to help!
Mary Beth Nunez will be happy to help!
Direct: 860-251-9681
