<p>Revised:
The sale of the <strong>old</strong> house is not counted toward GDP as GDP is intended to measure the value of currently produced goods and services in the economy. Used goods are not currently produced, and were already counted the year they were newly produced.</p>

<p>However, the services provided this year by real estate agents are in the current year, so the market value of those services, measured by real estate agent commissions are included in GDP.</p>

<p><a href="http://www.sextonmacro2e.nelson.com/student/section/ch06.html" rel="nofollow noreferrer">http://www.sextonmacro2e.nelson.com/student/section/ch06.html</a></p>

<p><strong>If</strong> the house was new it would fall under the expenditure approach the purchase of a house sold at 80 K would fall under Residential Investment (part of I investment).  </p>

<p>Using the Income Approach (<a href="http://www.econport.org/content/handbook/NatIncAccount/CalculatingGDP/Examples.html#incomeexample" rel="nofollow noreferrer">http://www.econport.org/content/handbook/NatIncAccount/CalculatingGDP/Examples.html#incomeexample</a> )</p>

<p>Depreciation -50 K<br>
business profits - 30 K</p>

<p>Depreciation and business profits would be added together toward National Income. </p>

CC BY-SA 4.0
2020-06-09T13:55:06.660Z
I don't think your first sentence is correct given that the question is about an old house.  Please see BKay's answer to [this question](https://economics.stackexchange.com/questions/4931/how-does-buying-selling-houses-affect-the-gdp/4932), and also explanation by NAHB [here](https://www.nahb.org/News-and-Economics/Housing-Economics/Housings-Economic-Impact/Housings-Contribution-to-Gross-Domestic-Product)
Adam Bailey
CC BY-SA 4.0
2020-06-09T14:33:39.160Z
Ok.  I will check
Mike J
CC BY-SA 4.0
2020-06-09T03:24:01.033Z
2020-06-09T15:32:50.240Z
2020-06-09T15:32:50.240Z
Mike J
<p>This question may appear to be naive, however, since I am having problems understanding it, I had to resort to ask it here.</p>

<p>How will the sale of an old house at a profit affect the GDP?
Let us say I bought a house in 2010 for <span class="math-container">$ \$100,000$</span>. Depreciation per year was <span class="math-container">$ \$10,000$</span>, hence in the year 2015, the house should have been worth <span class="math-container">$ \$50,000$</span>. However, in the same year (2015), I sold the house at a price of <span class="math-container">$ \$80,000$</span>  (thus a profit of <span class="math-container">$ \$30k$</span>). Certainly the <span class="math-container">$ \$50k$</span> won't be added into the GDP of the year 2015 because it is nothing but just a sharing of the expenses, but, what's bothering me is the profit of <span class="math-container">$ \$30k$</span>.
Since this is a kind of "value added", how do I incorporate it in the expenditure and income models of the GDP? Should I consider it as an investment made by the business?</p>

<macroeconomics><gdp>
GDP calculation on selling house at a profit
Harsh Sharma
# GDP calculation on selling house at a profit

(Asked by: username_0 on 2020-06-09)

This question may appear to be naive, however, since I am having problems understanding it, I had to resort to ask it here.

How will the sale of an old house at a profit affect the GDP?
Let us say I bought a house in 2010 for $ \$100,000$. Depreciation per year was $ \$10,000$, hence in the year 2015, the house should have been worth $ \$50,000$. However, in the same year (2015), I sold the house at a price of $ \$80,000$ (thus a profit of $ \$30k$). Certainly the $ \$50k$ won't be added into the GDP of the year 2015 because it is nothing but just a sharing of the expenses, but, what's bothering me is the profit of $ \$30k$.
Since this is a kind of "value added", how do I incorporate it in the expenditure and income models of the GDP? Should I consider it as an investment made by the business?

**Tags:** macroeconomics, gdp


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## 1 answers

### Answer by username_1 on 2020-06-09. Score: 2 | Accepted answer

Revised:
The sale of the **old** house is not counted toward GDP as GDP is intended to measure the value of currently produced goods and services in the economy. Used goods are not currently produced, and were already counted the year they were newly produced.

However, the services provided this year by real estate agents are in the current year, so the market value of those services, measured by real estate agent commissions are included in GDP.

<http://www.sextonmacro2e.nelson.com/student/section/ch06.html>

**If** the house was new it would fall under the expenditure approach the purchase of a house sold at 80 K would fall under Residential Investment (part of I investment).

Using the Income Approach (<http://www.econport.org/content/handbook/NatIncAccount/CalculatingGDP/Examples.html#incomeexample> )

Depreciation -50 K  
business profits - 30 K

Depreciation and business profits would be added together toward National Income.

> **Comments:**
> **username_2**: I don't think your first sentence is correct given that the question is about an old house.  Please see BKay's answer to [this question](https://economics.stackexchange.com/questions/4931/how-does-buying-selling-houses-affect-the-gdp/4932), and also explanation by NAHB [here](https://www.nahb.org/News-and-Economics/Housing-Economics/Housings-Economic-Impact/Housings-Contribution-to-Gross-Domestic-Product)  
> **username_1**: Ok.  I will check  

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