Expenses to deduct on house on contract sale in 2020

We sold a house that was planning on becoming a rental house, then changed plans, last year on contract to my son. We purchased it in 2017 as a foreclosure and it needed lots of work. What, if anything, can we deduct as expenses on our taxes from the sale of the house. We spent at least $2,000 last year on materials to repair the walls, floors, and windows. We also put a partial roof on it in 2018 and painted the exterior of the house in 2018. As we only sold it in october, there will only be about $1000 of capital gains on it, including taxes and interest. I will be speaking to my accountant on Monday but thought I would ask here first.

posted

Basically the purchase price + costs to buy + improvements + costs to sell = Cost basis

Sales price - cost basis = profit or loss

You can only deduct mortgage interest, points, and property taxes. Any capital improvements (but not repairs) are added to your cost basis, thus reducing your taxable capital gain.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.