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Merlo
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Category: Tax
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a l house i want to sell is empty, no renters, needs repairs.

Resolved Question:

a l house i want to sell is empty, no renters, needs repairs. If i do repairs that add to worth, do I have to pay capital gains and does that cancel the advantage of the repairs.

Does it matter if it's taking off a porch for better drainage, and removing rotten boards caused by the porch or if it's more routine?

new roof?
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.

Hello learner,

 

Adding repairs to the home would not necessarily increase the taxes you owe when you sell it. You would owe capital gains tax on any gain your have from the sale. If this is a rental property, your gain would be figured using the following formula.

 

Take your selling price, less your basis, less the cost of any selling expenses such as real estate commissions. You then must add back in any depreciation you have claimed over the years.

 

Your basis in the property would be the price you originally paid for the property plus the cost of any repairs that you made while you owned it. So you would increase your basis by the cost of any repairs that you make, which will help reduce your reportable gain.

 

If this was helpful please press the Accept button. It is the only way we receive any credit for helping with these questions.

 

Thank you learner

 

 

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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