Question

Jill bought a house 3 years ago and paid $175,000 for it and spent $7,000 in closing costs. Since, then she has made several improvements to the property for $75,000. Jills boss promoted her to VP of Market 5 and she had to relocate. She sold her house for $375,000 with $30,000 in selling costs. She bought a new house for $290,000. What is the capital gain on the sale of her original home?

Answer 1

$88,000

Step-by-step explanation:

Jill's original house value = $175,000 house cost + $7,000 closing costs + $75,000 improvements = $257,000

Jill's revenue from house sale = $375,000 selling price - $30,000 sale cost

= $345,000

Jill's capital gain = $345,000 sales revenue - $257,000 house original value

= $88,000