I'm preparing to sell my house in 2020 and did much of the work myself so there are no receipts or invoices to provide as evidence on many projects. Can I deduct time spent on projects at the rate of a typical contractor?
No. Time spent on projects is not deductible. If you made capital improvements and paid a contractor, actual dollars spent for large improvements can be added to the cost basis. Regular repairs and maintenance cannot be included. Think of things like new roof, large remodels, new driveway, finishing a basement, etc. as allowable items to include. These types of capital improvements can be added to the cost basis of the property when calculating gain. They include the cost of any improvements that added value to your home, prolonged its useful life, or gave it a new or different use.
A seller who has owned and used a home as a principal residence for at least 2 of the last 5 years before the sale can exclude from income up to $250,000 of gain, $500,000 for joint filers. TurboTax will help you determine your exclusion.
You may also deduct sales expenses in determining gain. Sales expenses include most items that would not be separately deductible on your taxes or loan fees.
Sales expenses include:
- commissions
- appraisal fees
- broker's fees
- legal fees
- advertising fees
- home inspection reports
- title insurance
- transfer taxes or fees
- geological surveys
- loan charges (points) or other fees paid on the buyer's behalf
Sales expenses do not include:
- mortgage payoffs or interest
- home equity loan payoffs
- rent-back costs
- payoff to creditors
- property taxes
- home owner association fees