Tax implications from selling house in CA

[2023Dreaming]

Hi! I have an investment property and I am going to sell it. If I understand this correctly:

Bought House $390
Downpayment $70K

Gets bought est $500k
- Remaining Mortgage $350k
- All selling costs ???

I take home whatever is left over. I think about 100k. What are my tax implications? It is on the 100K after all is said and done? Does my downpayment come into play at all when it comes to taxes? Because if I get $100k and my down payment was $70k, then shouldn't I be taxed on $30K, which would seem like the actual profit?

Any advice would be great! Thank you!

[RWD]

Your capital gain is the difference between the purchase price and the selling price. So $110k. But you may be able to deduct some selling costs:
https://www.stessa.com/blog/deductible-selling-expenses-rental-property/

[Sandi_k]

And if it was a rental, there will be depreciation recapture as well.

[Catbert]

Feds will tax as a capital gain.  California taxes at the same rate as income - ouch.

[yachi]

Your downpayment doesn’t come into play for taxes, but your numbers don’t add up.  If you bought the house for 390K and had a 70K downpayment, then your original mortgage would have been $320K.  It doesn’t make sense for there to be $350K remaining.

So if you remortgaged the property to do capital improvements, then you may get to add what you paid for those improvements to the $390K you originally paid for the house to arrive at a higher cost basis, and reduce your gain.

As others mentioned if this was a rental, then you’ll owe depreciation recapture on it.  Note that is true wether you actually claimed depreciation on your taxes or not — the IRS just expects that you did your taxes correctly in previous years.

[2023Dreaming]

You are absolutely right! I put down about $22k on this house. I bought it at $390 and we are listing at $590.