@Critter-3 wrote:
Yes it needs to be reported if you have a gain on the sale ... your cost basis is the amount it cost you to restore it ... not including your labor.
In my answer I forgot to include your restoration.
Your initial cost basis is zero. You can increase your cost basis by any amount you spent on restoration. Routine maintenance and simple repairs do not increase the cost basis, only amounts that improve the item, extend its useful life, and raise its value. You can't include anything for the value of your labor and time, only amounts you paid for materials or to other workers.
Then your taxable gain is the difference between the selling price and your adjusted cost basis. If audited, you would need to be able to prove your restoration costs with receipts. The tax code assumes all income is taxable unless you prove otherwise.
