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Angelina Jolie just sold her Los Feliz estate for $24.75 million. She paid $24.5 million for it in 2017, so the headlines called it a tidy $250,000 profit. (1)
I’ve been a CPA since 1981, and I don’t buy it. Not even close.
The home once belonged to legendary director Cecil B. DeMille. It’s 11,000 square feet on 2.1 acres. It hit the market in May at $29.85 million and sold roughly five months later for about $5 million less. (1)
Now start subtracting. Thanks to Measure ULA, the voter-approved “mansion tax,” the city of Los Angeles charges a combined 5.95% transfer tax on sales of $10.9 million or more. (2) On this sale, that’s about $1.47 million.
Real estate commissions nationwide now average 5.7% of the sale price, according to a Clever Real Estate survey of agents. (3) And consumer prices have risen about 37% since 2017, based on Bureau of Labor Statistics data. (4)(5)
So did she really make money? Here’s the real math, and how to run the same numbers on your own house.
1. The headline math vs. the real math
Headline math is easy: sale price minus purchase price. That’s how you get $250,000.
Real math counts what it costs to buy, hold and sell. We don’t know Jolie’s actual expenses, or about the improvements she undoubtedly made, so everything below is an estimate at typical rates.
Transfer tax: roughly $1.47 million, assuming the seller paid it. (2)
Commissions: Say she negotiated a luxury discount to 4%. That’s still about $990,000. At the 5.7% national average, it would be about $1.4 million. (3)
Property tax: Under California’s Proposition 13, the base rate is 1% of the purchase price, and taxable value can rise up to 2% a year. (6) Over roughly nine years, that works out to about $2.4 million, before any local add-ons.
Then add insurance, maintenance and the upkeep on 11,000 square feet, plus a pool house and guest house. (1) The true total is higher still.
Finally, inflation. Just to keep pace with the CPI, $24.5 million in 2017 would need to be about $33.5 million today. (4)(5) Selling for $24.75 million means losing nearly $9 million in buying power before a single expense.
To be fair, property tax is the price of living there, the way rent would be. So ignore it. Count only the likely selling costs, and her $250,000 “gain” still becomes a loss of more than $2 million.
2. Now do this math on your own house
Most of us do headline math, too. “We paid $200,000, and now it’s worth $400,000. It doubled!”
Maybe. Here’s a hypothetical. Say you’ve spent $60,000 over the years on a roof, a kitchen and a new AC system. Selling at a 5.7% commission costs another $22,800. (3) Your $200,000 “profit” just shrank to about $117,000.
And that’s before inflation, insurance and years of property tax bills.
As a former landlord, I learned to track every dollar going into and coming out of a property. It’s the only way to know whether you’re making money or just moving it around.
Start with what you paid, add every major improvement, subtract what it’ll cost to sell, then compare the result to inflation over the same years. The answer may humble you.
3. The tax side: Keep those receipts
Here’s the good news. If you’ve owned and lived in your home for at least two of the past five years, you can generally exclude up to $250,000 of gain from income, or $500,000 for married couples filing jointly. (7)
Most sellers will never owe a dime. But in pricey markets, a house you’ve owned for decades can blow past those limits.
That’s where receipts matter. The IRS lets you add the cost of improvements to your basis, and selling expenses reduce what you’re considered to have received. (7) Both shrink your taxable gain.
A new roof or an addition counts. Keep a folder, paper or digital, for as long as you own the house, and hang onto it after you sell.
Quick aside — most internet financial advice comes from people who weren’t alive during the last recession. I’ve been writing about money for more than 35 years. Want rock-solid advice? Sign up for the free Money Talks Newsletter. Takes 10 seconds. No fluff. No spam.
4. Carrying costs keep climbing
A home costs money every month, whether you sell it or not. And insurance is one of the bills rising fastest.
A Government Accountability Office report found that even after adjusting for inflation, premiums climbed 25% or more from 2019 to 2024 in parts of some states, especially hurricane-prone stretches of the Southern coast. (8) Relative to income, Florida, Louisiana and Oklahoma were hit hardest. (8)
Home insurance rates have exploded — and if you haven’t shopped around lately, you’re almost certainly paying too much. Fight back with Insurify Home Insurance — starting today.
Insurify is a free marketplace that pulls real quotes from dozens of top insurers side by side — see your rates in minutes. No endless forms, no spam calls, no obligation — just your best rate.
5. Budget for the repair you can’t see coming
Your house probably doesn’t have a pool house. But the math works the same way at any price: Eventually, something big breaks.
Furnaces, water heaters, refrigerators — home systems don’t fail on schedule, and replacing them can run into the thousands.
If that worries you, one solution is a home warranty. Choice Home Warranty turns those surprises into one predictable monthly cost. When a covered item breaks, they dispatch the technician — you pay a set service fee, not the whole bill. See what predictability costs — get a free quote here.
6. Your house is a place to live, not a retirement plan
A home can be a fine place to store wealth. But you can’t buy groceries with a kitchen. To spend that equity, you have to sell or borrow.
Selling means commissions and finding somewhere else to live. Borrowing usually means monthly payments. There’s a third option worth understanding before you sign anything.
Sitting on home equity but strapped for cash? Hometap invests in your property, providing you up to $600K now in exchange for an agreed upon percentage of the home’s future value.
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This isn’t free money. You’re giving up a slice of your home’s future value, so if prices climb, that slice gets more expensive. Read the terms carefully.
7. Get a second opinion before you sell or downsize
Deciding whether to sell, downsize or stay put is one of the biggest money moves you’ll make. It touches your taxes, your retirement income and where you’ll live for decades.
If you’d like help, SmartAsset matches you, free, with up to three fiduciary advisors — legally required to put your interests first. They can spot tax savings and planning gaps you’d never see alone, as well as expert investment advice. $100K+ in investments? Get matched free in minutes.
The bottom line
Angelina Jolie didn’t make $250,000 on her mansion. Once you count transfer taxes, commissions and nearly a decade of inflation, she almost certainly came out behind by millions.
That doesn’t make it a bad purchase. She got nine years in a landmark home, and that has value no spreadsheet captures.
But the same lesson applies to the rest of us. A house is a home first and an investment a distant second. Before you brag about what yours is “worth,” subtract what it cost to own and what it’ll cost to sell.
The number on the listing is a hope. The check at closing is the truth.
Sources: 1. TMZ; 2. Los Angeles Office of Finance; 3. Yahoo Finance; 4. Bureau of Labor Statistics; 5. Bureau of Labor Statistics; 6. California Legislative Analyst’s Office; 7. IRS; 8. U.S. Government Accountability Office
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