Since I purchased the house I put in a patio, finished garage, planted new grass, and some other improvements totaled $10K.
How do I report this on my taxes? As what improvement or repair? This is my primary residence.
Do I have to have the receipts to prove it? Plus I did the work myself and did not hire anybody?
How do I report and how much should be able to deduct?
2006-12-15 05:17:21 · 5 answers · asked by insurancelawcase 1 in Business & Finance ➔ Taxes ➔ United States
The cost of the improvements get added to your cost of the house. When you sell the house you subtract the total cost plus improvements from the selling price to determine your gain. There is nothing to report on your tax return until you sell the house.
In determining the cost of the improvements you can not add anything for the value of your time spent doing these jobs.
If your gain on sale is more than $250,000 you will need the receipts to prove the cost of improvements if the IRS audits the return.
2006-12-15 07:57:21 · answer #1 · answered by waggy_33 6 · 2⤊ 0⤋
Home improvement are not deductible on your taxes unless it is done for a medical condition deductible as a medical expense.
It is possible that if improvements increased the value of your home that it could higher the cost basis of your home. When you sale the home you will take the new adjusted cost basis - the sale price = capital gain(hopefully)/or Loss. You must keep your receipts to show what you spent for this to happen you get nothing for your own labor.
Repairs are maintenance to your home to keep it in good working order and Improvements add value.
2006-12-15 08:15:20 · answer #2 · answered by T D 2 · 2⤊ 0⤋
Sorry, no. Losses on the sale of a personal residence are NEVER deductible. And to add insult to injury, the $37k forgiven will likely be taxable income to you. You can side-step that if you were insolvent at the time of the forgiveness. If your total debt was more than your total assets you are considered insolvent. The IRS may require you to prove that, however.
2016-05-24 21:24:51 · answer #3 · answered by Emily 4 · 0⤊ 0⤋
They're all correct.
Only thing that I will add is that §121 exclusion is:
$250,000 for a single taxpayer
$500,000 for a married couple
So, when you sell your house (principal residence). You add the improvements to your basis and only get taxed on the sale if the gain exceeds these amounts.
2006-12-15 17:10:35 · answer #4 · answered by Anonymous · 1⤊ 0⤋
Easy answer. Improvements to your primary residence are not deductable.
2006-12-15 05:58:46 · answer #5 · answered by Wayne Z 7 · 3⤊ 1⤋