Q: Selling my house will I be taxed based on the amount of the sale or the amount minus mortgage and capital improvements?

A: It depends. If you the house was your principal residence for two of the five years prior to the date you will sell it, then you can exclude up to $250,000 of gain ($500,000 if married filing jointly). If you have not used the house as your principal residence for two of the last five years, a capital gains tax will apply. To determine the gain, you have to know the "basis" of your house. If you purchased the house in a conventional real estate transaction, your basis is the purchase price plus costs (broker fees, etc.) plus any capital improvements you've made (new roof, room addition, driveway, etc.). The difference between the sale price (minus costs of sale) and basis = gain.

A: It depends. If the house was your principal residence for two of the five years prior to the date you will sell it, then you can exclude up to $250,000 of gain ($500,000 if married filing jointly). If you have not used the house as your principal residence for two of the last five years, a capital gains tax will apply. To determine the gain, you have to know the "basis" of your house. If you purchased the house in a conventional real estate transaction, your basis is the purchase price plus costs (broker fees, etc.) plus any capital improvements you've made (new roof, room addition, driveway, etc.). The difference between the sale price (minus costs of sale) and basis = gain.