Submitted By: Amy
Answered: July 27, 2015 11:19 am

Several years ago we bought land and built a vacation home on it. Now we’re selling it. What is our cost basis for purposes of determining gain or loss?

When you sell property, the difference between what you receive and your tax basis in the property produces gain or loss. When selling property, include what you paid for this, such as the land and the cost of constructing the home as well as the initial closing costs (e.g., attorney’s fees, etc.).

Tax Glossary

Cash method of accounting

Reporting income when actually or constructively received and deducting expenses when paid. Certain businesses may not use the cash method.

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