top of page
taxmax services | tax services sacramento

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.

Future developments
The latest information on developments relating to Pub. 551, such as B. Laws enacted after this publication was issued can be found at

What's new
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.

Cost base
Rectified base
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.

Comments and suggestions. We appreciate your comments on this publication and your suggestions for future editions.
You can send us comments via Or you can write to:

Internal Revenue Service
Tax forms and publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

While we cannot respond to each individual comment we receive, we appreciate your feedback and will consider your comments as we review our tax forms, instructions, and publications.

Ordering forms and publications. Visit to download forms and publications. tax services Sacramento Otherwise, you can order current and previous forms and instructions at Your order should arrive within 10 working days.

Useful Things: You May Want To See:

463 Travel expenses, gifts, and cars
523 Sell your house

525 Taxable and non-taxable income

527 residential properties

530 Tax Information for Home Owners

535 Business Expenses

537 installment sales

544 Sales and Other Disposals of Assets

547 victims, disasters and thefts

550 Investment Income and Expenses

559 survivors, executors and administrators

587 Professional use of the house

946 Real estate depreciation

Form (and instructions)

706 U.S. tax return (and generation transfer)

706-A Additional US tax return

8594 Asset Acquisition Statement

For information on obtaining publications and forms, see Receiving Tax Aid near the end of this publication.

bottom of page