Finding Your Home's Tax Basis

Yikes! You made more than half a million dollars in home sale profit! Here's how to hold down the tax bill.

It's been almost ten years since Congress decided to make most home sale profits tax-free. When the law changed in 1997, most tax advisers thought it would be safe for most homeowners to stop being meticulous in tracking the tax basis of their homes.

Your basis is the investment in the house that you subtract from the proceeds when you sell to determine the taxable profit. But, if the first $250,000 of profit is tax free for single people and a cool half million bucks for married couples, why bother tracking your basis? What are the chances you'd ever crack the tax-free barrier?

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Kevin McCormally
Chief Content Officer, Kiplinger Washington Editors
McCormally retired in 2018 after more than 40 years at Kiplinger. He joined Kiplinger in 1977 as a reporter specializing in taxes, retirement, credit and other personal finance issues. He is the author and editor of many books, helped develop and improve popular tax-preparation software programs, and has written and appeared in several educational videos. In 2005, he was named Editorial Director of The Kiplinger Washington Editors, responsible for overseeing all of our publications and Web site. At the time, Editor in Chief Knight Kiplinger called McCormally "the watchdog of editorial quality, integrity and fairness in all that we do." In 2015, Kevin was named Chief Content Officer and Senior Vice President.