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Profit Calculation:
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Home selling profit is the net amount you earn after selling your property, accounting for the original purchase price, all associated costs, and any remaining mortgage balance. It represents your true financial gain from the transaction.
The calculator uses this simple equation:
Where:
Sale Price: This is the gross amount your home sells for. It's important to note this is before any deductions.
Purchase Price: The original amount you paid when buying the home, which serves as your cost basis.
Costs: Includes real estate agent commissions (typically 5-6%), closing costs, repair costs, staging expenses, and any other fees associated with selling.
Mortgage Payoff: The remaining principal balance on your mortgage that must be paid off when selling.
Tips: For accurate results, gather all your selling documents. Include all costs - even small ones add up. Remember that mortgage payoff may be different from your current balance due to prepayment penalties or other fees.
Q1: Are capital gains taxes included in this calculation?
A: No, this calculates gross profit before taxes. Consult a tax professional about potential capital gains taxes.
Q2: What if I made improvements to the home?
A: Major improvements can sometimes be added to your cost basis, potentially reducing taxable profit. Keep records of all improvements.
Q3: How accurate is this estimate?
A: It's only as accurate as the numbers you input. Be sure to include all costs for a realistic profit estimate.
Q4: Should I include my mortgage interest payments?
A: No, only include the remaining principal balance as mortgage payoff. Interest payments are considered ongoing costs of ownership.
Q5: What if I'm selling for less than I owe?
A: This would result in negative profit (a loss). You may need lender approval for a short sale in this situation.