What must the adjusted basis be subtracted from to find the gain or loss from the sale of a home?

To determine the gain or loss from the sale of a home, the adjusted basis must be subtracted from the sale price. The adjusted basis reflects the original purchase price of the home, adjusted for any improvements made and other relevant factors.

When a homeowner sells their property, the gain or loss is calculated by taking the difference between the sale price they receive and their adjusted basis. This gives a clear indication of the profit or loss made on the transaction.

While other factors like selling expenses and commissions may influence the overall costs associated with the sale, they do not factor into the fundamental calculation of gain or loss, which strictly involves comparing the sale price to the adjusted basis. Thus, focusing on the sale price and adjusted basis captures the essential elements required for this calculation.