When you sell a home, how do you determine what you made on the house while living there?

Question

In other words, is it what you paid for the home, and then subtract what you still own on it? I don't remember how your capital gain goes.

Fireguy17 · Accepted Answer

It isn't too hard to figure it out.
You bought your house for X amount of money, any improvements you made to the house, such as a new roof, finished the basement, flooring, plumbing, new toilets, landscaping, trees, all of those type of improvements, (you did keep your receipts right?) are listed as improvements, so you take what you paid off of the sale, and the cost of the improvements, (if any) and take those off of the sale price and that is what you made on the house.
Example:
You bought your house 20 years ago, for $60,000, over the years you did things like a new roof, new flooring, upgraded your bathroom, cabinets over the years, and spent 20 grand on that.
You now sell your house today for $120,000 (or for way more in certain areas) you take your 60 thousand plus the 20 grand on improvements and that is 80 grand.
Then you take the selling price $120,000, minus the 80 grand you spent on it over the years, and you made $40,000 on your house.
These are just easy numbers to work with.
In our state, it may be nationwide, if you have lived in your house a number of years, it is your primary residence, first time selling a house you do not have to pay taxes on the capital gains.
That's why you need your receipts.
I just put everything in a folder.
You can be exempt from capital gains even if it is your second/third.. time selling a house, but you would have to have lived in it for so many years, and I cannot remember the number.
The amount that you sell it for minus what you owe is your equity in the house.
So, if you built a lot or finished a lot or any part of the house, did a lot of the improvements, landscaping yourself any of that is sweat equity, which is the difference if you have hired it done, vs what you did minus the cost of the supplies, all which adds to your equity in the house.
Say you got an estimate to have your house painted and it was 15 grand, so you decided to paint it yourself and you spent 2 grand on paint and supplies, you added 13 grand to the value of the house by doing it yourself.

AviatorTom · Accepted Answer

Best bet is to talk to an accountant. There is no simple answer for real estate capital gains.

The following things at a minimum need to be considered: Initial purchase price, final selling price, any remaining mortgage and selling fees, improvements made to the property (may help with depreciation), seller's age (some locations have special rules for seniors).

Your real estate agent should be able to put you in touch with an accountant who specializes n real estate.

Anonymous · Accepted Answer

If you paid $100,000 for the house and still owe $60,000 but the house is now worth $500,000 your capital gain is based on the difference between what you sell it for and what you paid for it (with some other criteria factored in, and some possible exemptions). What you owe has nothing to do with it.

Advisor Smith · Accepted Answer

To determine what you made on the home, consider the selling price and subtract the remaining mortgage balance, any closing costs, and expenses related to the sale. This gives you the net proceeds. To calculate capital gain, start with the purchase price, add any major improvements (not maintenance), and subtract from the selling price. The difference is your capital gain, which may be subject to tax exemptions if it’s your primary residence. Always consult a tax advisor for specifics related to your situation.

NathanDavis · Answer

I'll get at least a couple of times, what I paid for... of those  location, location, location...  deals

Bricealan · Answer

@amy10223 Wondering the same thing? We paid 120,000, and now the place is valued at $1,100,000, that said, I don't know what level of tax is applied on Capital gains/

slatyb · Answer

What you owe isn't important. Add the purchase price plus any improvements to get your basis. Subtract the basis from the amount realized in the sale -- price less commissions and other costs of the sale. That's your gain.

Anonymous · Answer

Primary residence
Purchase cost including mortgage interest & fees and any improvements undertaken that still apply
Owed money only applies to the mortgage on the newly acquired property
Done correctly this should be fed through a tax free lien

Secondary property
As above only any owing will be subtracted from the balance before taxes are subtracted for a final payable figure

Friendlybro79 · Answer

I'd recommend calling your accountant or get one.

QuietRunner · Answer

gross spent - expenses

When you sell a home, how do you determine what you made on the house while living there?

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