How Do I Figure Capital Gains Tax on Real Estate?

how do capital gains taxes work

Take the purchase price of your property and add the cost of any improvements, "Realty Times" advises. If you bought a rental home for $300,000, for instance, that would be the basis for calculating your gains. If you later spent $30,000 on capital improvements -- a new roof and a kitchen remodel, for instance -- then your basis goes up to $330,000. This applies only to substantial improvements that add to the home's value, not to repairs. Fixing a leaky shower isn't a capital improvement, but replacing it with a newer, better shower would be. If you've been billed with a special assessment for neighborhood improvements -- $500 toward a new sidewalk, for instance -- you

can count those too.

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