Question:

Hi, I have sold a home and was wondering what expenses were allowed before calculating ma’aser. Specifically, I wanted to ask about a commission paid to a real estate agent to buy or sell the home, the purchase tax (in Israel) at the time of a home purchase, the lawyer fees paid to administer the sale documents, the home improvements and renovations done on the home while I owned it, and all of the interest payments on the mortgage I took out on the home when I bought it. I also would like to know if I should be figuring a cost of living index increase on the original purchase price to equal the dollars used at the time of purchase to the time of sale. One other wrinkle was that I invested in furniture for the home (a decent amount of money) and the sales price I received for the home was to include all of the furniture (per the buyers request) Can I deduct the fair value of the furniture off of the sales price before calculating ma’ser? Thanks so much for your help.

Answer:

The expenses you incurred directly in order to purchase or sell the home can be used to calculate the net profit, e.g. if you paid $100,000 for the actual purchase but needed to add $20,000 to cover the taxes, lawyers’ and agency fees, it is considered as if the actual purchase price was $120,000. The same would be true for interest if it was needed in order to finance the purchase. In this case you probably would have to reduce the cost of the interest by the amount that you saved on your income tax.

Regarding the cost of living Rav Moshe Feinstein pasken (and many poskim concur) that one may calculate that into your purchase price, so if for example you purchased the home ten years ago and $100,000 in those days is worth $110,000 today when you are selling it, you could consider the price that you paid as $110,000 and not $100,000. Rav Moshe stipulates though, that the cost of living is based on basic commodities and not luxury items.

Concerning the furniture it would depend on whether there was a true sale of furniture or if it was just that you basically through it in for free. In the latter case you could not include the cost of the furniture.

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