# Calculating Capital Gains for Real Estate

Here is a question using hypothetical amounts when understanding the amount considered capital gain when selling real estate before two years. I want to understand, is the number I am calling capital gains correct? And is my rough calculation of my final profit seeming reasonable? Trying to understand if I can walk away without a loss, when selling before two years is up.

Tried to use numbers for easy math below, not to emulate real values.

### Capital Gains Calculation

Amount Description
\$500k closing amount for home sale
(\$50k) realtor fees
(\$300k) mortgage payoff
(\$10k) random other fees
\$140k my capital gain that can be taxed

Is \$140k the right number for the capital gain, in this case? And, below, does \$25k seem logical for final profit?

### After Tax Calculation

Amount Description
\$140k capital gain
(\$30k) capital gains tax on above amount (a little over 20%)
(\$15k) interest paid on mortgage to try and reclaim for breaking even
(\$50k) down payment from initial transaction to reclaim
(\$20k) expenses on home improvements
\$25k actual profit for me considering my expenses and tax
• The cost basis should be what you paid for the house, not the "mortgage payoff". The mortgage payoff just tells you what you have left on the loan, which hopefully is less that what you paid for the house (unless you've tapped into the equity with a HELOC) Commented Feb 8, 2023 at 18:18

``````Capital gains = sales price - purchase price.