Law Offices of Connie Yi, PC
Tell Us About Your Case

For the safety of our community, clients and staff, we have suspended all in-person meeting effective March 17, 2020. All consultation meetings will be via Phone or Zoom Video Conferencing. Please contact us at (925) 484-0888 or email us directly at [email protected] to schedule the consultation.

View Our Practice Areas

Do I have to worry about capital gains taxes when I sell my home? p2

Those of us who remember publisher-millionaire Steve Forbes' presidential campaigns may still be able to close their eyes and hear his mantra: "Do the math." His platform was based on instituting a flat tax rate for income tax. It sounds so easy. But so does a comedian's tax reform idea: "How much did you make? Pay that amount."

Tax law is complicated. There's no way around it. We have been talking about capital gains and the sale of a taxpayer's primary residence. As usual, what initially appears to be a fairly straightforward calculation is not. In our last post we took the first step by explaining how to figure out how much of the sale price, if any, is taxable. Specifically, we were discussing adjustments that have increase the basis.

The things that would decrease the basis are generally anything that would decrease the value of the home. For example, your neighbor pays you $50,000 for a right-of-way and builds a driveway from the main road across your land to his land. That $50,000 is deducted from the basis, because, in essence, you have already sold the right to that strip of land. You can't sell it twice.

Similarly, during the mortgage meltdown, lots of homeowners realized they owed more on their mortgages than their homes were worth. Government programs helped many homeowners by reducing the principal of the mortgage note. In this context, if Bob owed $100,000 on his mortgage, and the government program managed to lower the principal to $80,000, the $20,000 difference is deducted from the basis.

You aren't quite done yet, though. We'll explain in our next post.

Source: Internal Revenue Service, "Publication 523: Selling Your Home"

No Comments

Leave a comment
Comment Information

Contact Us

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Email Us For A Response

Office Locations

Law Offices of Connie Yi, PC
323 Ray Street
Pleasanton, CA 94566

Phone: 925-484-0888
Pleasanton Law Office Map

19925 Stevens Creek Blvd
Suite 100
Cupertino, CA 95014

Toll Free: 888-312-6978
Map & Directions

San Francisco
490 Post Street, Suite 508
San Francisco, CA 94102

Toll Free: 888-312-6978
Phone: 415-433-3350
Map & Directions