@Rodthabod wrote:
Yes I purchased the property in 2002 for $7500. I borrowed $116,000 for the mortgage. Since I didn’t buy it from a real estate company my question is where is my proof that the total purchase price? The total purchase price was around $150,000 to $175,000 .but like I said before let’s just say I tell the IRS that the total purchase price is $160,000? I can’t be a 100% sure of the exact price, but that is the ballpark.
In most states, your county clerk's office has a record of the transaction. It sounds like the purchase price was $7500 cash down plus $116,000 = $123,500. But there may be other things I don't know about.
If audited, the IRS will allow what you can prove with reliable records. They are not required to accept a "ballpark" unless the auditor is feeling particularly generous. That's all I can tell you--most people aren't audited, but if you are audited, the IRS is allowed to assume the entire sales proceeds is taxable capital gain unless you can prove your basis.
