Question

If Mike buys a property for $200,000 and invests $45,000 into it and then sells it for $560,000 what amount would be subject to capital gains taxes on the transaction?

Answer 1

To calculate the amount subject to capital gains taxes, subtract the total cost of acquiring and improving the property from the selling price.

Step-by-step explanation:

To calculate the amount subject to capital gains taxes, we need to find the difference between the selling price and the total cost of acquiring and improving the property.

Total cost of acquiring and improving the property = $200,000 + $45,000 = $245,000

Amount subject to capital gains taxes = Selling price - Total cost

= $560,000 - $245,000

= $315,000

Therefore, the amount subject to capital gains taxes on the transaction would be $315,000.