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Returning Member
posted Apr 2, 2025 3:59:02 PM

Calculating the cost basis of a house

I bought my house more than 30 years ago, and now I'm getting ready to sell and need to calculate the cost basis. What all qualifies for expenses to deduct, and how must these be documented? Also, I don't remember the exact sale price I paid. Is that a public record I can look up?

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Expert Alumni
Apr 2, 2025 4:07:29 PM

If you sold your main home during the current tax year, TurboTax can determine if you need to report the sale on your tax return. Generally, profits of up to $250,000 (up to $500,000 on a joint tax return) don't need to be reported to the IRS. TurboTax can figure this out for you.

 

To enter the sale of a personal residence in TurboTax Online:

 

  • Click on Federal Taxes
  • Click on Wages and Income
  • Scroll down to Less Common Income
  • On Sale of Home (gain or loss), click the start or update button

For tax purposes, you need to pinpoint your adjusted basis to figure out whether or not you have gained or lost in the sale.

  • The adjusted basis is essentially what you've invested in the home - the original cost plus the cost of capital improvements you've made.
  • Capital improvements add value to your home, prolong its life, or give it a new or different use.
  • They don't include expenses for routine maintenance and minor repairs, such as painting.
  • Examples of improvements are a new roof, a remodeled kitchen, a swimming pool, or central air conditioning.
  • You add these expenses to your original cost to increase your adjusted basis (which in turn decreases the amount of gain on a sale).

TurboTax will prompt you for this information in the Sale of Home section. Keep whatever documentation you still have for the qualifying improvements.

 

On the other hand, you need to subtract:

  • Any depreciation, casualty losses or energy credits that you have claimed to reduce your tax bill while you've owned the house.
  • If you postponed paying taxes on the gains from selling a previous home (as was allowed prior to mid-1997 for homeowners who used the profits to buy a more expensive replacement house), then you must also subtract that gain from your adjusted basis.

If your gain on the sale will be less than the applicable limit, and if it was never used for business or as a rental, and you didn't receive a Form 1099-S, you don't need to report the sale on your return at all. Not having to report the sale could save you from needing to upgrade your TurboTax product.

 

See this article for more information on determining the gain on the sale of your home.