How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Lane Your Own Question
Lane
Lane, JD, CFP, MBA, CRPS
Category: Capital Gains and Losses
Satisfied Customers: 10122
Experience:  Have been providing Financial and Tax advice for 30 years.Concentration in Corporations, Estate, Income Tax and Business Planning
1929974
Type Your Capital Gains and Losses Question Here...
Lane is online now
A new question is answered every 9 seconds

DC REAL ESTATE BOUGHT 1980 SOLD 2015. RENTAL PROPERTY. CONTINUOUS

Customer Question

dC REAL ESTATE BOUGHT 1980 SOLD 2015. RENTAL PROPERTY. CONTINUOUS IMPROVEMENT. CAPITAL GAIN ON ORIGINAL VALUE OR THE IMPROVED VALUE AND EXTENSIVE REMODELING BEFORE THE SALE?
Submitted: 8 months ago.
Category: Capital Gains and Losses
Expert:  Lane replied 8 months ago.
Hi,...Capital gain is sales price minus basis (as you know). Basis is increased to reflect improvements (lowering capital gain) but lowered to reflect depreciable property - whether you took that depreciation or not)....Also important is to distinguish between (1) capital improvements and (2) repairs and maintenance...Repairs are usually one-off fixes that help keep the property in good working condition and habitable. Although the price is irrelevant, most of my qualifying repairs tend to be under $500 in cost....Whether you’re fixing a hole in the wall, or a unclogging a shower drain, you can deduct the cost of these minor repairs from the current year’s tax liability....A good rule of thumb is that if you are adding a new item, or upgrading an existing item, then it’s usually considered an improvement....The assumption is that these improvements will add value to the property over multiple years, not just the current year....IRS just recently issued more specific guidance than ever before...The following are all considered capital improvements... Improvements. You must capitalize any expense you pay to improve your rental property. An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use.Betterments. Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property.Restoration. Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition.Adaptation. Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property.
Expert:  Lane replied 8 months ago.
I hope this has helped....Please let me know if you have any questions at all....If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit That’s the only way JustAnswer will credit us for the work here....Thank you!Lane……I hold a JD (Juris Doctorate, the law degree), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.

Related Capital Gains and Losses Questions