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Level 1
posted Jan 26, 2022 9:11:05 AM

Capital gains offset

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?

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3 Replies
Level 15
Jan 26, 2022 9:13:39 AM

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.

Level 1
Jan 26, 2022 9:20:45 AM

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

Level 15
Jan 26, 2022 9:26:03 AM

@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)