Tax deductions for home improvements to sell house

Asked almost 3 years ago - West Chester, PA

If I complete home improvements (roof., Paint) in order to help sell my house, can I deduct these expenses on my taxes. I am moving for a job if that makes a difference.

Additional information

Q1 14 years
Q2 155,000
Q3 270,000
Q4 married

Attorney answers (3)

  1. Henry Daniel Lively

    Contributor Level 20

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    Best Answer
    chosen by asker

    Answered . You can deduct fixing up expenses off the sales price of your home when you are calculating whether you have a taxable gain. Sales price - Tax basis - commissions and closing costs - fixing up expenses = taxable gain. This can be offset by your exclusion of $250,000 (single) or $500,000 (married) if this is your principal residence and you lived in the house as such for 2 of the last 5 years. The fixing up expenses cannot be used to offset other income you may have.

    Any individual seeking legal advice for their own situation should retain their own legal counsel as this response... more
  2. David L. Carrier

    Pro

    Contributor Level 18

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    Answered . If you've lived in the house as your primary residence for at least 2 of the last 5 years, a single person can exclude $250,000 of gain and a married couple $500,000.
    The repair/selling expenses only go to increase your tax basis when calculating your capital gain on the sale of the home and so they'd be deductible, but probably worthless because you can't use those expenses to offset other income...
    Q1: How long have you lived in the house?
    Q2: How much did you pay for it?
    Q3: How much are you selling it for?
    Q4: Are you married?

  3. Suzanne Alexandra Ascher

    Contributor Level 8

    Answered . I agree with the above.

    Also, I assume that your home has been used by you and your spouse entirely as a primary residence and would meet the criteria for the primary residence exclusions of $250,000 (single)/$500,000(married) of capital gain as already explained in the other attorney's answers.


    Internal Revenue Code 121 and its applicable Treasury Regulation sections address the primary residence exclusion for capital gains on the sale of primary residences.


    However, in the event that you have used part of your home as a rental property in which you collected rent from a tenant, hopefully you have reported this income and related expenses on Schedule E, page 1, of your IRS form 1040 individual income tax return. Further, if you have rented part of your home, this will have an impact to how much of the primary residence exclusion you may be entitled to any capital gain calculated upon the sale of your home. You may have income tax to pay on the rental portion of your home. Also, are any of these "home improvements" you are considering making impacting the rental portion of the home, therefore requiring an allocation of those disbursements to the primary residence portion and rental portion?


    It is a very common practice for people to have rented a portion of their home to a tenant at some point and, if you have done so, please consult your tax attorney and accountant to determine the income tax impact when you sell your home, taking into consideration your new disbursements you plan to make to help make the house more attractive to potential buyers.


    All best and good luck on the sale of your home.


    Suzanne Alexandra Ascher, Esq., CPA, Tax LL.M.

    Legal disclaimer by Suzanne Alexandra Ascher, Esq: My answer is strictly for information and education purposes... more

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