How do I figure capital gains when the house was built from scratch? Parents bought land for $25,000 25 years ago. Then built house on said land using $150,000 from a 401k. Parents divorced in 2009. Mom retained house and refi to be in her name only. Step dad died in 2017. Mom sold house in 2024 for $490,000. At time of sale she had a mortgage from the refi in 2009 of $146,000. Used proceeds to purchase another home. Is the cost basis $25,000 + $150,000 + any improvements done like a new deck, furnace and AC? Then subtract that from the $490,000 minus all the realtor fees associated with the sale?
Mom is 77 and her income is about $38,000 annually from SSI and a couple pensions. Will she even have to worry about capital gains since she is under the $47,000 income for capital gains?
