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Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1408
Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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I bought a fixer upper house and worked on it in my spare time.

Customer Question

I bought a fixer upper house and worked on it in my spare time. It took me 5 years to fix it up and sell it. how do I file this on my taxes, and what can I claim to reduce my capital gains
Submitted: 5 years ago.
Category: Tax
Expert:  Jax Tax replied 5 years ago.
The sale is reported on sch D as a long term capital gain or loss. You will report the difference in your adjusted basis and the sales price as the gain or loss. Your adjusted basis is the original cost plus all the costs associated with fixing it up plus the cost of selling it. If you have been paying a mortgage on the property, you should have been claiming the interest as investment interest on schedule A. Since the deduction is limited to gain, you would have been unable to use it so 100% of the mortgage/investment interest would have been carried.forward to the year of sell then utilized as a sch A investment interest up to the capital gain. As for property tax, that would have been on the sch A as a current year deduction each year. I hope this answers your question.
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Customer: replied 5 years ago.
If I didn't claim the property taxes each year, can I recover them all in the year of sale, or can I only claim this most recent years taxes
Expert:  Jax Tax replied 5 years ago.
If the property tax was not claimed, you cannot take it now. You would have to file amended returns form 1040x for basic property tax. Special assessments if any are added to the basis

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