Sold mom with dementia's home, figuring cost basis question

What's the sale price?

From another point of view, was this her personal residence in which she lived for at least 2 of the past 5 years?

If so, AND gain is less than 250,000$, no gain; not even reportable.

I'm even trying to figure this one out for a client way up in UA; that's Upper Alabama.

ChEAr$, Harlan Lunsford, EA n LA

Sorry to hear about your mom like this.

Is painting repair or improvement?

These are big amounts. Can't you get the receipt from the company?

In IRS Pub. 523 painting inside or outside is specifically listed as an example of a repair that does not add to basis.

Bob Sandler

text -

$555,000 Sales Price

In case these are your next questions:-)

She lived in the house continuously for 30 years. Selling expenses paid by her $43,764

--Pat

text -

This is in California. Home sold for $555,000, she lived in it for 30 years continuously, selling expenses paid by her were $43,764.

--Pat

Thank you for your reply:-)

I am not sure what the difference is wrt the painting (i.e. repair or improvement). The old paint was pealing off so she had the entire house repainted. Is that what you mean?

Unfortunately, I don't know the company name for the pool remodel. So no way to get receipt. I know the company name for the new windows, I haven't tried to contact them, are you suggesting that the cancelled checks won't be proof enough?

--Pat

When was your dad alive? Did he own it with your mom? Depending on the state, she gets a stepped up basis for either half or the entire house based on the value at his passing. This can make all the difference to you. Joe

Joe,

My mom and dad divorced in 1980 (two years after purchasing the home). My mom received the house in the divorce.

--Pat

Then it's probably repair, so it does not add to cost basis. All the other items you mentioned do strike me as improvements.

That depends on the IRS. They require receipts, but may accept substitutes such as canceled checks, especially if it sounds reasonable. If I were an IRS auditor, I would accept it :).

You wrote

Slip with Mom's handwritten note .

Does the withdrawal slip have the company's name on it? You should make your best effort to contact the companies (maybe they're out of business now, so you won't succeed), but document your efforts and lack of response, if any, in the event of an IRS audit.

Am I the only one that thinks most of the listed items are repairs/replacements/upkeep rather than improvements?

-HW "Skip" Weldon Columbia, SC

HW "Skip" Weldon wrote: ...

... Not the only one, no...other than the two remodels (and outside possibility some of the windows, maybe, if they were a real upgrade of original single-pane to energy-efficient, for example) would seem to be simply routine maintenance/repair.

Guess one can always use and see if get audited or not...I'm sure many have folded in much even less likely to be actual capital improvements in the past (not that that really justifies anything, just a comment/observation).

As the house is being sold at a net gain in excess of the exclusion, I wouldn't worry about this (as far as the "audit lottery" is concerned). As long as you have a reasonable basis for taking the position you plan on, no problem.