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Capital Gains Tax

I bought raw land back in April 2021. The purchase price was $190k and I put down $60k towards the loan at closing to being my load to $130k. We are now selling the land for $209k and I owe $108k on the loan. My question is once I get a check at closing (estimated to be $93k), do I pay capital gains tax on the $93k or can I subtract my original cash down payment from that and only pay taxes on $33k? Another question would be is there a write off for the mortgage and extra principal payments I made that brought my loan down to $108k?

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3 Replies
M-MTax
Level 11

Capital Gains Tax

In order to calculate your gain you need to subtract your adjusted basis from your sales price. The loan amount has nothing to do with that calculation.

M-MTax
Level 11

Capital Gains Tax

If you paid $190k and are selling for $209k then your gain is $19k and you can subtract the likes of selling expenses and closing costs from that $19k gain.

There is no write-off for extra payments made on the loan. 

Capital Gains Tax

That makes sense. I think I am over thinking it. I sold some real estate last year that I paid cash for and gained on the sale so I just didn't know if the mortgage effected anything. Thank you!

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