topic Deduct improvement (repair) to vacation (second) home required for sale? in Deductions & credits

Deduct improvement (repair) to vacation (second) home required for sale?

wcrr — Mon, 23 Feb 2026 09:53:32 GMT

As part of a sale this year of our second home (which we had inherited in 2008) we agreed to put in a new septic system to replace the old one which was badly in need of repair. This was agreed to in writing in the Real Estate Condition Report. The new septic system cost (in round numbers) $10,000. Can we deduct the cost of this repair from our taxes? If so, is this considered an adjustment to the cost basis? Or is it a sales expense not already listed in the Seller's Closing Statement which details the various other prorations and adjustments? Thank you.

We are using TurboTax Premier.

Re: Deduct improvement (repair) to vacation (second) home required for sale?

fanfare — Sat, 28 Jan 2023 20:57:12 GMT

whether you add it to expenses, or add it to basis, the result is the same.

@wcrr

Re: Deduct improvement (repair) to vacation (second) home required for sale?

wcrr — Sun, 29 Jan 2023 00:01:39 GMT

Thank you. Is one approach favored over the other (e.g., addition to basis vs. additional sales expense) by the IRS in terms of a "good fit"?

Re: Deduct improvement (repair) to vacation (second) home required for sale?

fanfare — Sun, 29 Jan 2023 01:56:23 GMT

IRS is not going to know your accounting.

Expenses are all added together into one item "Expenses" that is shown on Form 8949.

Re: Deduct improvement (repair) to vacation (second) home required for sale?

wcrr — Sun, 29 Jan 2023 19:52:56 GMT

Thank you.

Re: Deduct improvement (repair) to vacation (second) home required for sale?

Carl — Sun, 29 Jan 2023 20:35:10 GMT

While the IRS may not know different, since adding/replacing the septic system is in fact, a property improvement, the correct way is to add it to the cost basis of the property.

Re: Deduct improvement (repair) to vacation (second) home required for sale?

wcrr — Sun, 29 Jan 2023 20:44:33 GMT

Thank you, Carl.