Tax Law (Questions About Taxes)/Selling house


We bought a new house 5 years ago.  We took an equity loan on our old house (which was paid for) in order to put down large down payment on new house.  We planned on paying off equity loan when old house sold.  It took a good bit longer than we thought...just sold old house this past summer.  For 5 years we've been paying on the equity loan in order not to "pay interest on the interest" that accumulated.  Because we did that, we had the equity loan paid down about $25000.  We received check at closing on old house for $22000.  The house sold for about $13000 below appraisal.  None of the money we received for the equity loan was used for anything but down payment on current house.  Will we have to pay taxes on the $22000 received at closing.  Thank you for your help in advance.  


Thanks for your question.

You don't pay tax on the proceeds of sale, you pay tax on the gain.  Since you did not occupy the house as your primary residence for 24 of the past 60 month, you will owe tax on any gain.

Your gain is the excess of sale price (less costs of the sale) over your adjusted cost basis.  Your basis is the original cost plus capital improvements (such as a new room, etc) minus any depreciation allowed (if it was a rental).  

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

All Answers

Answers by Expert:

Ask Experts


John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

©2016 All rights reserved.