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If I buy a house for $500,000 and I put in $70k into upgrades, that means the house when everything is all said and done would be $570k. If later I decide to sell the house for $600,000 in 4 years, do I have to pay the capital gains tax on the difference of $100k ($500k-$600k)?? OR, since I paid in $70k cash (after tax dollars) would I pay capital gains on $30k? ($570k-$600k)??
I feel like if I pay taxes on $100k, that $70k I put into it after tax dollars cash then I would be getting double taxed. PLEASE EXPLAIN.... : )
The house is in California.
I feel like if I pay taxes on $100k, that $70k I put into it after tax dollars cash then I would be getting double taxed. PLEASE EXPLAIN.... : )
The house is in California.
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