Original cost, adjusted cost, and gains? Where do I start to know what my profit on the sale of my home was?
Original cost is the amount paid either for the home alone or the land plus amounts to construct it. Adjusted cost is the original cost minus any deductions such as casualty losses or additions. In general, terms, gain at home would be the sale price minus the original cost. However, your gain/loss for tax purposes is the sale price minus the adjusted cost of the property.
The latest information on developments relating to Pub. 551, such as B. Laws enacted after this publication was issued can be found at IRS.gov/Pub551.
Uniform capitalization rules. As of 2018, small businesses will not be subject to the unified capitalization rules if their average gross annual revenue for the past three tax years is $ 25 million or less and the business is not a tax haven. See the uniform capitalization rules below.
Similar exchanges. As of December 31, 2017, similar to Section 1031, the exchange treatment only applies to exchanges of real estate held for use in a commercial or investment activity, with the exception of real estate held primarily for sale. Some personal or intangible asset exchanges that began in 2017 and ended in 2018 may be considered similar exchanges. See the similar exchanges below.
The basis is the amount of your tax real estate investment. Use the property base to calculate depreciation, exhaustion, and accident losses. Also, use it to calculate any profit or loss on the sale or other disposition of a real estate. Accurate records must be kept of all elements that affect the property base so that these calculations can be performed.
This publication is divided into the following sections.
Basis other than costs
The basis of the property you are buying is usually cost. It may also be necessary to capitalize (add to the base) some other costs related to the purchase or manufacture of the property.
Your initial base in the property is determined (increased or decreased) by certain events. As you make improvements to the property you increase your base. If you take deductions for depreciation or accidental losses, you reduce your base.
You cannot base your base on some resources based on cost. This also applies to goods that were received in the event of an involuntary conversion and under other circumstances.
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