I purchased my home 40 years ago for 50,000. I have refinanced several times doing a cash out each time. The home is now being sold for $400,000. I currently owe $200,000 on the mortgage. During the 40 years of ownership I have paid a cumulative total of about $100,000 towards the principal on the loans. There have been no improvements to the property that would add to the $50,000 basis. How does the $100K of principal payments affect the capital gains calculations? Where to I account for the principal payments on the tax forms?
