Deductions on Sale of Remodeled & Inherited Home

Forum|Forum|4 years ago
February 19, 2022
2 replies
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We (siblings & I) inherited a home in Nov. 2018 & sold it in Jan. 2021 (> 2 years). The cost basis is established by an appraisal for the date of death. My stepmother had a life estate (revoked when she moved out) but remained in the home for over a year, so we could not start work.

After inspecting the property, we discovered major structural issues and code violations that prevented us from selling the home. We remodeled and sold the home. Remodeling items: Replaced some 0rafters & roofing, replaced some floor joist, floors, sheet rock ceilings to contain asbestos tile, kitchen cabinets, interior doors, all new plumbing, relocated laundry, new AC/Heating, bathrooms, paint, windows, landscaping, etc.

Are these items considered repairs or capital improvements (i.e., deductible)?

Can I deduct the cost of travel (my labor is a definite NO) from out of state to complete repairs?

The home appraised for $75K and sold for $180K after remodel.

Best answer by ColeenD3

Yes, these are improvements. You are correct that your initial basis is the FMV on the death of your mother. You would add the costs of the improvements to your basis to get your adjusted basis.

No, the travel is not deductible. It would have had to have been a business property.

ColeenD3Answer

Yes, these are improvements. You are correct that your initial basis is the FMV on the death of your mother. You would add the costs of the improvements to your basis to get your adjusted basis.

No, the travel is not deductible. It would have had to have been a business property.