 |
Adding To Cost Basis |
| |
 |
Dear Ms. Lank: We purchased some land in 1968 with the intention of building but never did.Now we are selling it for substantially more than we paid, so we expect to pay capital gains tax.Of course I expect the original purchase price to be deducted from the sale price to determine the actual gain, but what other costs or expenses are considered?Original closing costs and fees?Present costs and fees?Cost of putting in a driveway?Property taxes for 37 years?Our attorney fees then?Now?Cost of a lawsuit against us years ago?Original owner sued to regain the property claiming a breach-of-contract because we did not build.He lost, court ruled in our favor.Thanks you for any light you may shed on all this. |
| |
| |
 |
When you sell, most of the items you mention --original cost, legal costs of buying and selling, money spent on improvements (the driveway) -- all can be subtracted from sale price.Those property taxes can not. Assuming you itemize deductions, you could have been taking property taxes as a deduction every year.Subtracting them now would be double-dipping.If you haven't been deducting them, it's realatively simple to file amended tax returns; you can do that for three years back.As for the lawsuit that confirmed your ownership, I don't know. Could it be added to your cost basis on the theory that it improved the value of the property? I'm not a lawyer or a CPA, and you'd better get professional guidance on that one. |
| |
|
Edith
Originally published on March 20, 2005 |
| |
| |
|
Back to Summary
|
< Previous | Next > |
| |
|
|
