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Level 2

Question

Capital gains offset

Forum|Forum|4 years ago
January 26, 2022
1 reply
21 views

Hello, can we Include upgrade and remodel costs in the purchase price of our new primary residence to offset the capital gains from the sale of our former primary residence on our 2021 tax return?

Level 15

No. The requirement to purchase a new home for the same or greater amount as the prior home sales price to defer any capital gains on the sale was removed from the tax code in 1997.

Mlbarnett50Author

Level 2

We sold our house for $775,000 but the purchase price was 600,000. The capital gains is $175,000, correct?

Level 15

@Mlbarnett50 wrote:

We sold our house for $775,000 but the purchase price was 600,000. The capital gains is $175,000, correct?

Correct.

Gain or Loss on a Home Sale -

Sales Price minus Sales Expenses minus the Adjusted Basis of the home (Purchase price plus the cost of any improvement prior to the sale)