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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1608
Experience:  Certified Public Accountant
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I am a resident of North Carolina. I sold a house in in 2016

Customer Question

I am a resident of North Carolina. I sold a house in Virginia in 2016 which my late husband and I built in 1964 for his parents to live in. No rent was collected, and it has mostly been unoccupied since they passed on in the early 90's. I rolled the money from the house sale into a small RV. How do I figure capital gains tax?
JA: What state is this in? And how old is the RV?
Customer: The house is in Virginia. The RV is new.
JA: Has anything been filed or reported?
Customer: I have paid property tax(reported on my NC tax form) and insurance. All the upkeep of the property, including mowing has been our expense and not reported.
JA: Anything else you want the lawyer to know before I connect you?
Customer: I feel I do not have the knowledge to know the right questions to ask, but I am concerned about capital gains tax, although this house was not built for profit making, but to provide a home for loved ones , and I am now unable to do the mowing and work that it requires.
Submitted: 3 months ago.
Category: Tax
Expert:  Mark Taylor replied 3 months ago.

Hi, my name is Mark. I will be happy to help you with your questions. The gain would be determined by the adjusted basis of the home. The adjusted basis would be the original purchase price plus any improvements. The sales price less your adjusted basis would determine the amount of capital gain. The gain would be taxed at the federal level between 0 and 20%. How much do you expect the gain to be?

Customer: replied 3 months ago.
That is my dilemma. We purchased the lot, designed the house and did a lot of the work ourselves. There is no record of a house purchase.
Expert:  Mark Taylor replied 3 months ago.

Do you know how much it cost to build the home?

Customer: replied 3 months ago.
I would have to guess 25 - 30 thousand dollars (in 1964)
Expert:  Mark Taylor replied 3 months ago.

Did you make any improvements? What was the cost of the lot?

Customer: replied 3 months ago.
I think the lot was 8 thousand. We added central air, new kitchen countertops, asphalt driveway, thermal replacement windows,and a storage building.
Expert:  Mark Taylor replied 3 months ago.

Do you know the cost of the improvements?

Customer: replied 3 months ago.
My guess would be 10 thousand
Expert:  Mark Taylor replied 3 months ago.

Sorry I had to step away from the computer. So it sounds like your basis would be somewhere between $43,000 and $48,000. What did the home sell for?

Customer: replied 3 months ago.
I netted 93 thousand
Expert:  Mark Taylor replied 3 months ago.

Do you know what the sales price was? Were there any loans against the property?

Customer: replied 3 months ago.
No loans. Sales price was $100,000. Would travel for maintenance - mowing, etc 3 hrs. round trip be considered? Insurance and property taxes?
Expert:  Mark Taylor replied 3 months ago.

The property taxes would be an itemized deduction on Schedule A. The travel and general maintenance costs would not be deductible.

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