what would be taxed on a home bought by a single person for $40,000 now selling for $700,000. Home bought 1975
is cost of new home deductable. I was told only deductable on home sold for $700,000 is initial cost, improvements, plus $250,000. Everything else is taxed and no credit is given in purchasing new home. In this case I have about $150,000 improvements plus the $40,000 initial cost on home which leaves about $300,000 so I need to know if I can put that on a new home or if regardless, it is taxable and I must pay taxes on it as a resident of California. Is this true or can cost of new home be deducted before taxes.