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gains on home sale

I'm going to sell my house in California for about $1,200,000 and I paid $285,00 twenty years ago. I understand that my spouse and I will be free from taxes for the first $500,000 in gain. We understand that we will have to pay tax on the remaining gains but this will be a long term gain, right? Also I understand that we can deduct any imporvement expenses from the gain. I am wondering what kinds of "improvements" are allowed. I would imagine that a new pool or a kitchen remodel would certainly qualify, but what about smaller stuff: Paint, tree trimming, tree removal, etc. Where are the rules on this?

-- Thanks, T

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Reply to
tina
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snipped-for-privacy@excite.com (tina) posted:

Correct, to be reported on Schedule D.

Yes, a new pool and kitchen remodel are excellent examples of "improvements" for which the cost can be added to your basis. But painting, tree trimming/removal, etc., are _maintenance_ items -- not improvements.

Pub 523 - Selling Your Home.

Bill

Reply to
Bill

But if done immediately before selling (in order to sell faster/at a higher price), can they then be considered selling expenses? Seth

Reply to
Seth Breidbart

Doesn't matter (though probably not). Whether capital improvements or selling expenses the amount spent reduces total taxable income. Stu

Reply to
Stuart A. Bronstein

Painting isn't a capital improvement, but I believe that painting in order to sell reduces the taxable amount. Seth

Reply to
Seth Breidbart

Yeah, I had misread the post I responded to. Ignore it if you can. Stu

Reply to
Stuart A. Bronstein

"Fixing-up" expenses as a selling expense (usually done within 90 days of sale) are not allowed on a personal residence, and haven't been allowed for a number of years. Such maintenance items are no more a deduction than they would be if the home owner was not selling the house. For a business or rental property the situation is different. In Pub 523, "selling expenses" are defined as including:

- Commissions,

- Advertising fees,

- Legal fees, and

- Loan charges paid by the seller, such as loan placement fees or "points."

Reply to
Herb Smith

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