Calculation of Long-Term Real Capital Gain on Housing

An individual purchases a house for $400,000. One year later, they sell the same house for $440,000. Assuming there are no other costs or income associated with the property, what is the capital gain on this housing investment?

Isolating Capital Gain in a Real Estate Investment

Analyzing Components of Housing Return

An investor buys a residential property for $500,000. Over the next year, the market value of the property increases to $525,000, and the investor collects $20,000 in rental income. The capital gain on this housing asset for the year is calculated by adding the $25,000 increase in market value to the $20,000 in rental income.

Match each housing investment scenario to its correct capital gain percentage for the holding period.

An investor sold a house for $525,000, realizing a capital gain of 5% for the one-year holding period. The original purchase price of the house was $______. (Enter a number only, without commas or currency symbols).

Evaluating Housing Investment Strategies

An investor is comparing the performance of two properties they owned for one year.

• Property X was purchased for $200,000 and sold for $220,000. It also generated $15,000 in rental income.
• Property Y was purchased for $500,000 and sold for $540,000. It also generated $10,000 in rental income.

Based solely on the capital gain component of return, which property performed better as a percentage of its initial price?

An individual buys a house for $250,000. One year later, the market value of the house has decreased to $240,000. During that year, the owner also received $15,000 in rental payments. Which of the following statements correctly identifies and calculates the capital gain (or loss) for this period?