Work the setup, then the numbers
Appreciation and depreciation
Compare compound annual change with simple total change, using the rate and period supplied.
- Value after compound annual change
- $362,785.43
- Total dollar change
- $72,785.43
- Simple-change comparison
- $357,425.00
- Simplified adjusted basis
- $315,000.00
- Equity before selling costs
- $180,000.00
- Net sale proceeds after loan payoff
- $158,000.00
- Simplified gain or loss before exclusions and taxes
- $53,000.00
Follow the arithmetic
290,000 x (1 + 0.0775)^3. The simple comparison instead applies the original value x rate x years. Equity is current value - loan balance. Simplified gain is (sale price - selling costs) - (purchase price + eligible buying costs + capital improvements); loan payoff does not reduce gain.
Intermediate values keep precision; dollar results display to cents.
The formula and its assumptions
Compound value = starting value x (1 + annual change rate as a decimal)^years
Positive rates model appreciation; negative rates model depreciation. This arithmetic assumes the same annual rate throughout. It is not a forecast of market prices or a calculation of tax depreciation. Actual value inputs are separate from the compound-growth model. The simplified basis omits depreciation and other basis adjustments; gain is not taxable gain after exclusions, and equity is not gain. Eligible costs and tax consequences need fact-specific analysis.
DRE Reference Book: appraisal