What is indexed cost of home sale

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boater07
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Joined: Sun Apr 15, 2007 7:44 pm
Location: Northwest

What is indexed cost of home sale

Post by boater07 »

While working on the IRS sale of residence, I stumbled onto indexed cost of home.
After 30 years, I'm sure there has been inflation evidenced by my gain.
Have not been able to figure out how that works.
Any clues??
fabdog
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Location: Williamsburg VA

Re: What is indexed cost of home sale

Post by fabdog »

I have not heard of this. There is the cap gains exclusion if it has been your primary residence.

Could you provide more details on what you found when researching this topic so we can help?

Mike
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boater07
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Location: Northwest

Re: What is indexed cost of home sale

Post by boater07 »

I found the clue by googling. Now trying to understand :?
Topic Author
boater07
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Joined: Sun Apr 15, 2007 7:44 pm
Location: Northwest

Re: What is indexed cost of home sale

Post by boater07 »

There is apparently an index number to use. I googled index cost
and now my head is spinning
fabdog
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Location: Williamsburg VA

Re: What is indexed cost of home sale

Post by fabdog »

I see. the only reference I found with Google is for calculating tax on sale of an asset in India

https://wealth18.com/cost-inflation-ind ... n-purpose/

https://cleartax.in/s/cost-inflation-index

Is what you found consistent with these sites? If so, then yes, if you live in India, it is relevant. If you live in the US, not relevant

Mike
sailaway
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Re: What is indexed cost of home sale

Post by sailaway »

I google IRS Publication 523 and the only mention of "index" referred to the index of the publication, not costs.
Gill
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Re: What is indexed cost of home sale

Post by Gill »

There is no indexing with the sale of a residence. You simply take your original cost and add all capital improvements plus costs of selling and deduct that from the proceeds of sale less a $500K exclusion for a married couple. That becomes your taxable gain.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
Topic Author
boater07
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Joined: Sun Apr 15, 2007 7:44 pm
Location: Northwest

Re: What is indexed cost of home sale

Post by boater07 »

My mistake to overlook the country involved.
Was searching for ways to reduce substantial CG
destiny
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Re: What is indexed cost of home sale

Post by destiny »

While working on the IRS sale of residence, I stumbled onto indexed cost of home.
After 30 years, I'm sure there has been inflation evidenced by my gain.
Have not been able to figure out how that works.
Any clues??
Not valid for US tax residents, maybe in other parts of world not here in US.

The idea is to adjust your cost basis with inflation to calculate capital gains, we have been in low inflationary territory , so the capital gain impact is not that high. With higher inflation this would make sense to adjust the basis to keep up with inflation so as to keep the capital gains tax low, there were some discussion to introduce a bill in congress to adjust cost basis with inflation , may be I hope this will gain traction and become law if we trend into higher inflationary market conditions.
once bitten, twice shy
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