What do you do if you have legitimate expenses from remodels, pool additions and other improvements but don't have any paperwork?
My 80 year old mother-in-law lived in her home for nearly 50 years, the purchase was for $140K and just sold for $1M. She is single and does qualify for the $250K exemption and closing costs etc., however, she is looking at a substantial gain.
Over the years, about $350K was put into the home through roofs, remodels, pools, massive landscape projects etc. however, over the years, she did not keep good records and most of what she had was lost in a flood many years ago.
There are photos and no question that work was put into the property.
Can we safely increase the cost basis?
What happens if we are ever challenged and we don't have all the receipts and paperwork for about 1/2 of the work?
