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I sold a home last year and understand that the taxes will be based on a cost basis of the home but I have no idea what that is.

I sold my primary residence last year and would like to know what the cost basis for any gains.
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1 Reply
JulieS
Expert Alumni

I sold a home last year and understand that the taxes will be based on a cost basis of the home but I have no idea what that is.

The cost basis of your home is what you paid for it, plus any major improvements and minus certain adjustments. 

 

If you still have the closing document from when you bought the home, that will have most of the information that you need.

 

You start with the price you paid for the home. These are things from your closing document that you can add to your basis:

 

  • Abstract fees (abstract of title fees),
  • Charges for installing utility services,
  • Legal fees (including fees for the title search and preparing the sales contract and deed),
  • Recording fees,
  • Survey fees,
  • Transfer or stamp taxes, and
  • Owner's title insurance.

 

Improvements can be added to your basis as well, but not maintenance and repairs. Improvements are things that increase the value of your home like a kitchen renovation, or a new roof. They don't include things like patching walls and painting, which are repairs. For more details about calculating your home's basis, follow this link. 

 

If you ever used your home for business or rental purposes, you will need to recapture your depreciation

 

Most people can exclude up to $250,000 ($500,000 on a joint return) of gain on their home if they lived in the home for at least 2 or the 5 years before the sale. 

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