Investors & landlords
No, expenses to get ready to sell are not added to the adjusted basis. In general, these are repair expenses that you would do to maintain the home at a basic level and they are deducted as an expense.
A capital improvement is something that actually adds to the value of the home or increases its usefulness, and is added to the basis of the property. Some examples of capital improvements are:
- Remodels and room additions (including decks and porches)
- New or upgraded landscaping, irrigation, sprinkler system
- Hardscape such as pavement, block or retaining wall, patio
- Fencing
- Swimming pool, spa
- Storm windows, doors
- New roof
- Central vacuum or security system
- Upgraded wiring, plumbing, ductwork
- Central heating, AC, humidifier
- New furnace, water heater
- Filtration, soft-water, or septic system
- Built-in appliances
- New flooring or wall-to-wall carpeting
- Upgraded insulation
- Satellite dish
You will add the cost of capital improvements to the basis of your property.
From the information you have provided, it appears that your starting basis is $458200 (original cost - Land value). To this value you will add the cost of your capital improvements and the expense of the sale to determine your adjusted basis. You will enter this on the page Sales of Business or Rental Property in the box on the line Cost of Property (or Tax Basis) Plus Expenses of Sale
