I bought a house in 180000 in 1995 and sold it at 250000 in

I bought a house in $180,000 in 1995 and sold it at $250,000 in 2006. How much was my real gain in absolute and relative terms? Use the Inflation Calculator of the Bureau of Labor Statistics.

Solution

Ans: In terms of absolute numbers, the gain is = $250,000- $180,000 = $70,000

However, in real terms the inflation should be taken into consideration. As the inflation rate is 2.6%, the real value of the house is $243,664. Thus real gain is $63,664 (Ans)