Go Back To Search Results

Question

How does capital gains work when selling house?
I bought a cottage for 200,000 2 years ago if i sell for 300,000 do i only pay capital gains on 100,000?

Posted by braves92@sbcglobal.net on 07/17/07
Total Answers: 1

Answers-

If the house is your primary residence, Up to $250,000 gain is tax exempt. If it is not a primary residence, you pay capital gains tax on the gain. The Gain is computed by taking your original cost, the "Basis" and adding the cost of any improvemnts to the house to become the "adjusted basis". Improvemnts like new doors, windows, roof, etc. apply. Regular maintenence, like yard work, cleaning etc do not..You then subtract the Adjusted basis from the sale price. In your case, if the house cannot be called your primary residence ( you LIved in more than 6 Months per year) and you had no improvements. the gain would be 300k - 200k or 100k. If it is your primary residence, you get a cool 100k tax free.. Excellent! Note that if you are married and filing jointly the capital gain exclusion on the sale of a primary residence doubles to 500k. Hope this helps

Answer posted by boldkevin on 2007-07-17 06:44:30

Select Keyword