Deductions made for home improvements on sale of home

[khotz]

I sold the house I lived in for over 41 years. I made many improvements to the house during that time. I don't have all the receipts for many things that were done in the 80's nd 90's. How do I get deductions for those items? Also, I replaced the roof 3 times during those 41 years. Can I deduct all three replacements?

[xmasbaby0]

Are you single----was your gain over $250,000?   Or are you married and was your gain over $500,000?

If your gain was more than  $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return.  Whether you re-invested the gain in to another house is irrelevant.  If you  have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)

If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).

• If you are using online TT, you need Premier or Self-Employed software to report the 1099-S

[ErnieS0]

No. You do not get any deductions but you can add the cost of improvements to the purchase price of the house to reduce taxable gain. 

You are taxed on: Sales price - sales expenses - purchase price - improvements.

You can include estimates. If you are audited, the IRS can disallow anything you don't have a receipt for so it's up to you about what you want to claim. It's a bit late now, but if you have pictures, you can show those in an audit, bring cost estimates and discuss that with the IRS.

You can include your roof replacements.

As super Tax Champ @xmasbaby0 said, if you qualify for an exemption, you only have to reduce any taxable gain below the exemption amount.

[Dave412]

On the premier version im to a section that says "sales expenses" after entering the price of the house that was sold. I understand you can put in all the closing costs in this section BUT my question is do you enter major home improvements such as a roof and furnace in this section called "Sales Expenses," or do you enter it later? 

[Opus 17]

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@Dave412 wrote:

On the premier version im to a section that says "sales expenses" after entering the price of the house that was sold. I understand you can put in all the closing costs in this section BUT my question is do you enter major home improvements such as a roof and furnace in this section called "Sales Expenses," or do you enter it later? 

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Improvements are added to the cost basis.  If Turbotax asks for the "purchase price" include the improvements along with the purchase price.  (Turbotax should be asking for the cost basis, not the purchase price.). There may be a "guide me" interview where Turbotax will ask about various improvements and calculate the cost basis for you, it comes up in some asset sales but maybe not all of them..

Also note to your original question, if audited the IRS does not have to award any basis adjustment you can't prove.  While you may want to estimate the cost of items you no longer have receipts for, you may lose the adjustment if you are audited and can't prove them.

Also, one final point.  You only claim an adjustment for improvements that are still part of the property.   If you replaced the roof in 1990 and again in 2015, only the 2015 improvement counts, since it is still part of the property and the older improvement has been removed.  Same with furnace, carpet, kitchen remodel, etc.