Owned For 50 Years

There is no longer any provision for postponing tax if you buy another home, so forget that part. First of all, your cost basis is a lot more than the original $20,000. You can add to that anything spent over the years on permanent improvements --each new roof, for example (but not roof repairs). Any additions, new storm windows, new furnace, things like that. Fences -- the list is pretty long, just about anything that wasn't a repair or redecorating. You are entitled to estimate as best you can, because you probably don't have records going back 50 years. If you inherited part of that house when your husband died, your cost basis may have become higher at that point, and it's worth consulting a tax professional for information. After all that, you are entitled to a profit of up to $250,000 free of federal capital gains tax ($500,000 if you sold in the year your husband died). Any remaining gain is taxed at no more than 15 percent by the IRS