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Level 2
posted Jun 10, 2020 3:27:21 AM

Land Cost Basis on Casualty Loss: Can I add property taxes to cost basis of land since I was waiting for City to complete purchase.

Rental house burned down. The building part of the casualty loss is done. The land part just sold 2.5 years after the fire and 2 years after the City offered to buy the land as parkland.  The City's (purchaser's) constraints caused the 2 year transaction timeline.  

 

I want to include those two years worth of property taxes in the land's cost basis since they were only caused by the City's foot dragging.  What do you think of that?

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1 Replies
Level 15
Jun 10, 2020 7:38:08 AM

If you did not claim those two years of property taxes on ANY tax return after the fire and prior to closing on the sale, then that's how you do it. You treat the taxes as carrying costs and add them to the basis.