Capital gains are not calculated based on the amount of proceeds that you walk away from a closing with. Capital gains are determined by the difference between your adjusted basis and the net sale price. Let’s say that you bought a property or a million dollars and over time it appreciated to two million dollars. Your original cost basis was a million dollars but over time you may have whittled down your basis to some lower number through depreciation deductions. In order to know what the gain is you need to know how much it appreciated (or increased in value) over time, and you also need to be cognizant of how much your basis declined as a result of depreciation deductions. Your total gain is the difference between your current low adjusted basis and the net selling price (net of only the transactional costs of the sale such as your commission and other amounts that reduce the amounts realized). So gains are not determined by how much cash you have, but the difference between your basis and the net selling price.
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