Saturday, May 20, 2006

How do I calculate my capital gain when I sell?

Author: boored
Category: Investor's Checklist

You will likely owe taxes on your capital gain, therefore it behooves you to know how it’s calculated.

Basically, your capital gain on the property is the difference between the adjusted tax basis and the sales price.

Calculating Capital Gain

Sales price (adjusted for costs of sale such as commission)  $400,000 Minus Adjusted tax basis 250.000 Equals Capital gain (on which tax is due) $150,000.

Thus, to go through our example, your basis is $250,000. When you sell, after taking off the costs of sale (in this case $400,000), you subtract the basis from the adjusted sales price and that’s your capital gain. The capital gains tax rate as of this writing is 15 percent for most taxpayers.

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