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Posted by CrossedSwords on March 19, 2007, 2:04 am
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Sold second home in '06. Will declare as Long-term capital
gain on 1040D. Can I use any home improvements, e.g. roof,
plumbing to offset gain? I have enough documentation of
such that would bring my gain down next to nothing.
If so, do I simply put "adjustment to basis" or do I have to
list specific improvements?
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Posted by L K Williams on March 19, 2007, 10:36 am
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CrossedSwords@webtv.net wrote:
> Sold second home in '06. Will declare as Long-term capital
> gain on 1040D. Can I use any home improvements, e.g. roof,
> plumbing to offset gain? I have enough documentation of
> such that would bring my gain down next to nothing.
>
> If so, do I simply put "adjustment to basis" or do I have to
> list specific improvements?
Neither. If the expenditures are truly improvements, and
not just repairs and maintenance, you simply add them to
the basis and enter the total, as a single number, on
Schedule D.
Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Bill on March 19, 2007, 11:11 am
Please log in for more thread options CrossedSwords@webtv.net posted:
> Sold second home in '06. Will declare as
> Long-term capital gain on 1040D. Can I use
> any home improvements, e.g. roof, plumbing
> to offset gain? I have enough documentation
> of such that would bring my gain down next to
> nothing.
>
> If so, do I simply put "adjustment to basis" or
> do I have to list specific improvements?
Yes, so long as they were truly "improvements." There's a
line drawn between improvements and maintenance. Plumbing
is very close to the line: e.g., a new powder room or
shower stall is a definite improvement; fixing a leak or
clogged toilet is definitely _not_.
"Improvements" are described in Pub 17 as "having a useful
life of more than one year, increasing the value of the
property, lengthening its life, or adapting to a different
use."
You add the cost of such items to your total cost basis --
recorded in your own records. There is no change necessary
on tax forms, as the only entries are "Proceeds" and "Cost"
(which is where you enter the total basis figure). Accurate
records are advised, in the event of an audit.
Bill
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by PurplePenguin44 on March 20, 2007, 3:04 pm
Please log in for more thread options In this case, it seems like the person might want to push
the envelope in the other direction and view the plumbing as
long-term. I say this because I'm assuming the person did
not take the plumbing (and the roof) in the year paid,
right?
-Doug
PS By the way, this is what I love about taxes. People
want to be honest, but they don't want to be pushovers.
They want to claim what they reasonably can.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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