Posted by dealmaker on January 05, 2006 at 08:50:38:
Time to get a “real” CPA! Also time to file an amended return for '04, or take Block up on their no mistakes guarantee.
I used Block back in '69 becuase I’d had a complicated year. The Air Force had moved sent me on two extended temporary assignments, I’d met and married my wife and she had gotten a transfer (also Air Force) back to my home base.
We needed some help with the moving deduction stuff. They just sat and filled out the short form and asked for $35. I asked “what about the moving deductions?” The gal said, “Oh, you can’t take that because you’re military and they paid all your expenses.” Since we were short about $800 on my wife’s move we looked at each other and got up and walked out.
I bought a condo in Oct 2004 for $80K, lived in while fixing it up (cost = $20K), then sold it for $125K in May 2005.
Am I paying gain on $45K or $30K? I am guessing, since I lived there, I cant increase the basis by the capital improvements? Is that right? Had I not lived there, would it be the same result?
If not, it’s a shame-- I barely stayed there, I mostly “lived” at my boyfriend’s, but I had my voter’s reg., car reg., bills, etc. all sent there. Sigh
Posted by dealmaker on January 04, 2006 at 22:13:37:
Regardless of whether you lived there or not you can increase the basis by the cap improvement. Your basis in now $100K, your gain is $25K. Of course it’s SHORT TERM, gain so it’s taxed as ordinary income.
I bought my first condo in July 2002, lived there, sold in April 2004. Bought for $45K, sold for $55K made $5K in capital improvements. I JUST filled out my return for 2004 (I was getting a refund, so I procrastinated, I guess!!), and I went to H&R block. They said that since I lived there, I could not include capital improvements, and there was no resultant increase in basis, so my gain was the $10K, not the $5K.
I knew I should have found a new CPA, but mine had health problems and retired unexpectedly (hence, the procrastination).