Sellers often wonder that answer. In short, it depends. Selling your property is a taxable event, and if your investment was profitable, you will be liable for the capital gains. Capital gains are not set in stone. You would need to calculate such profits.
Calculate your costs. Purchase price, closing costs, investment funds all count. For example, if you purchased a home for $200,000 and paid $5000 in closing costs and invested in a $20,000 kitchen, the total cost is $225,000. Now if you sold it for $300,000 and paid $20,000 in closing costs and commission, the taxable profit is $55,000. That is the taxable amount.
This taxable amount is seen as income provided you were the owner for under a year.
Your capital gains are taxed as regular income if you held the property for less than one year or as long-term capital gains if you held it for more than one year. The IRS taxes long-term gains anywhere from 0 to 20 percent based on tax bracket.
If you sell the property at a loss, though, you would owe no tax upon sale.
