Have a Tax Question? Ask a Tax Expert
Welcome and thank you for giving me the opportunity to assist you with your tax question.
For a rental home, your basis is the original purchase price of the house plus your closing costs for buying the property. However, it does not include the value of the property's land, so you need to separate the value of your land from the value of the house/building. This is a simple calculation with the information from your closing paperwork and the most recent tax assessment of your property.
Purchase Price $100,000 ($50,000 land/$50,000 building)
Closing costs $5,000
Depreciation taken or that could have been taken $10,000
Sales Price $200,000
$50,000 + $5,000 - $10,000 = $45,000
$200,000 - $45,000 = $155,000 gain
Please let me know if you require further information or clarification. Thank you.