Hi,...Looks like no one else is picking this up. I'll help you here....Your capital gain would normally be sales
price minus basis ... and basis is your purchase price, PLUS improvements. (Amounts of cash actually received because some of the proceeds you may have borrowed to initially purchase or refinance the house had to be re-paid is irrelevant to capital gain)....Again, the most basic formula for gain is sales price minus your purchase price....But there are a couple of other factors here (1) the gift of equity, and (2) whether this was your primary residence when you sold it....The gift of equity DOES reduce the capital gain, because you gave away that much (that portion) of the house, (you didn't sell that portion). ... So the modified formula would be (sales price, minus purchase price, minus gift of equity, equals capital gain)...BUT NONE of that matters if this was your primary residence (IRS
test for that is having lived in the house for any 24 months out of the 5 years before the sale) ... Because if so, then $250,000 of gain ($500,000 for those married filing jointly
) is completely excluded from taxes anyway....Please let me know what questions you have from here..Lane....I hold a law
degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law
, an MBA, with specialization in finance & tax, as well as CFP® and CRPS
designations. - I’ve been providing financial, Social Security/Medicare
, estate, corporate & tax advice since 1986.