How do I calculate cost/basis in the property?
Generally, your cost basis will originally be the purchase price of the property plus certain other expenses listed on your closing statement. These could include real estate taxes owed by the seller, settlement fees and title insurance – be sure to thoroughly check your records to ensure you’ve added all payments to your property’s basis.
However, your cost basis will likely not remain static over the years and any changes are referred to as your adjusted basis. To calculate your adjusted basis:
1.) Note the cost of the original investment that you made in your property
2.) Add in the cost of major improvements (e.g. additions or upgrades)
3.) Subtract any amounts allowed via depreciation and/or insurance payouts (for casualty and theft losses)
You can find more information on calculating your capital gains in our article here: https://www.greenbacktaxservices.com/blog/capital-gains-and-losses-on-your-expat-tax-return/