What Was Your Net Gain?
Your net gain (profit) or loss from the sale of your house is the difference between what you paid and what you received. But it's really not quite that simple. Consult real estate and tax professionals about current allowable tax deductions. To calculate your net taxable gain, you must first figure out the basis, or what you actually paid for the house.
YOUR ORIGINAL PURCHASE PRICE (down payment plus mortgage) $________________
Plus fees connected with the purchase of
the house (closing costs, etc.) +________________
Plus cost of improvements (work out below) +________________
+________________
+________________
=________________
Equals starting basis =________________
Less casualty losses (for example, flood or fire) -________________
Equals ADJUSTED BASIS for calculating gain =________________
Next, you need to figure out what you actually received, or the adjusted sale price of the house. Let's assume you sell your house for $130,000. That doesn't necessarily mean you receive $130,000. You may have a number of sale-related expenses that reduce that amount.
SALE PRICE FOR YOUR HOUSE $________________
Less real estate commission -________________
Less settlement costs -________________
Less sale-related fix-up expense -________________
Equals ADJUSTED SALE PRICE of the house =________________
Less ADJUSTED BASIS -________________
Taxable NET GAIN (or loss) on the sale =_________________
A final note: You must pay off the lender when you sell the house. This has no bearing on net taxable gain from the sale.
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