Realized Gain or Loss

Question 1

Are repairs and maintenance deductible expenses when taxpayer sell his vacation home?

Answer 1

No. Vacation home is personal belonging, so repairs and maintenance are nondeductible personal expenses.

Question 2

What can be included to the cost basis when disposing of property?

Answer 2

Capital additions are included to costs when transferring or defending title to the property, such as commissions and legal fees. Capital additions also included the cost of improvements that increase the property’s value, lengthen its useful life, or convert it to different use.

Question 3

Can property acquired cost included to the basis of property?

Answer 3

Yes. Costs incurred to obtain clear title or make the property ready for use are included to the basis, such as:

1. Sales or exercise taxes and transfer taxes paid on the purchase.
2. Title insurance and survey cost.
3. Expenses paid to deliver, install and test property, such as inspection fees.
4. Recording , legal and accounting fees, title fees, advertising costs, administrative costs, escrow fees.
5. Settlement charges to sellers( including the commission and state tax/stamps). Mortgage interest and property tax are not expenses, but they are deductible on schedule A.

Question 4

Nondeductible Expenses

Answer 4

These costs include all the costs you incur to obtain a home loan--for example:
•appraisal fees
•mortgage broker's commissions
•pest inspection fees
•credit report fees
•loan fees (not points)
•mortgage insurance premiums, and
•commitment fees.

You also can’t deduct or add to your home’s tax basis hazard insurance premiums, homeowners’ association fees, or utility fees.