Selling a country home that has large acreage? Or maybe an investment property, or even a farm property, it is important to know and understand what capital gains are in Real Estate and their tax ramification. This blog post helps a property owner with an easy way to calculate any gains that you might have if the property being sold is not a primary single family home.
Understanding Capital Gains in Real Estate
When you sell a stock, you owe taxes on your gain - the difference between what you paid for the stock and what you sold it for. The same holds true when selling a home (or a second home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate, follow these steps:
1. Purchase price: _______________________
The purchase price of the home is the sale price, not the amount of money you actually contributed at closing.
2. Total adjustments: _______________________
To calculate this, add the following:
- Cost of the purchase - including transfer fees, attorney fees, and inspections, but not points you paid on your mortgage.
- Cost of sale - including inspections, attorney fees, real estate commission, and money you spent to fix up your home just prior to sale.
- Cost of improvements - including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
3. Your home's adjusted cost basis: _______________________
The total of your purchase price and adjustments is the adjusted cost basis of your home.
4. Your capital gain: _______________________
Subtract the adjusted cost basis from the amount your home sells for to get your capital gain.
A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
· You have lived in the home as your principal residence for two out of the last five years.
· You have not sold or exchanged another home during the two years preceding the sale.
· You meet what the IRS calls "unforeseen circumstances," such as job loss, divorce, or family medical emergency.


Are you searching for homes to buy in Viroqua or Vernon County Wisconsin
Abandoned Farm...To some that is such a romantic image. Years ago, I briefly worked for a real estate company, which was legendary for their liberal usage of this particular phase.
I did not last long at that particular company and move along to a more rewarding career.




Here is a Charming Country Home... it's affordably price and has many updated features. Such as newer French Door to the deck, newer kitchen and newer baths. All is in good condition with 3 possibly 4 bedrooms guaranteeing comfort and convenience to everyone.
Exterior: With almost 4acres of land there will be plenty of room for large vegetable gardens or perhaps to raise a few animals. The yard is level and mostly grass lawn, except the portion directly behind the home, which is has some woods on the hillside. The owner built a Clary Pole shed, which is approximately 7 years old and is 30X40. The property fronts on a dead end road, so there is very limited traffic making it a great location for children to play or dogs to run. The location is nearby several favorite Trout streams; one being the West Branch of the Kickapoo and the other is Knapp Creek. It is also an easy few minutes drive into Westby by way of County Road P or cut across over Carlson Ridge Road and save a few miles. Asking: $159,900