Capital Gains Example
Gomer purchased land for farming for $100,000.
During the time he farmed the land, he invested $25,000 to increase the productivity of the soil and the crops he grew.
When Gomer sold the property to a home builder, he sold the land for $200,000 dollars. Gomer's capital gain is figured as follows:
Property sold for:
Minus original purchase price:
- 100,000
Minus investment for improvement:
- 25,000
$ 75,000