How do Cost Basis Factors into Capital Gains Tax? You can think of cost basis in real estate as the total cost of buying the property. Consider it as a baseline: When you sell the property, the cost basis is subtracted from the net sales price to determine capital gains tax liability. That’s why you should document the cost basis of your home over time.
To calculate the cost basis of their homes, owners typically start with the purchase price. The cost basis rarely stays the same over time, and once it’s changed, it becomes the adjusted basis. Several factors can increase or decrease the adjusted basis. Increases in adjusted basis can result from:
- The cost of additions and improvements to the house
- Money spent to restore the property after damages or loss
- Legal fees incurred in relation to the property
Decreases in adjusted basis can result from:
- Receipt of insurance payments due to a casualty loss or theft
- Tax credits for home energy improvements
- Depreciation from renting out all or a portion of the home
If you sold your primary home last year, there’s little you can do to avoid capital gains tax liability when you file taxes in April. If a homeowner sold their house and had a gain over the exclusion amount, they’re going to pay taxes. If they have some potential capital losses pending, these might offset the gains if they took the losses in the same year. But most people are not walking around with huge unrealized capital losses. Check out below to see what home is currently listed for sale in Sunflower Village in September 2025:
47397 Bartlett Drive, Canton: 4 bedrooms, 2.1 bathrooms, 2,308 sq. feet, 2 car garage, Listed Price: $500,000
Sunflower Village Home Listed for Sale
September 2025
For more information on Sunflower Village, contact The DiMora Team today at 248-505-7728 or jim@dimora.com.