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Level 1

How do I establish the cost basis of a house I built 30 yrs ago as a second home?

 
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Level 20

How do I establish the cost basis of a house I built 30 yrs ago as a second home?

Diligently.  Your cost basis is the cost of the land, materials, and labor you paid for.  Plus other required legal costs such as for permits, inspections and surveys.  

If you don't have your records, you have a problem.  If audited, the IRS doesn't have to give you credit for anything you can't prove.


 Taxpayers should always save records related to the purchase or construction of a home for the entire time they own it plus at least seven years after they sell. 

6 Replies
Level 20

How do I establish the cost basis of a house I built 30 yrs ago as a second home?

Your cost basis is what you paid for it. Are you converting this property to a rental? Or did you sell it in 2017? (The fact it's a 2nd home doesn't matter for establishing cost basis)  Your cost basis will include what you paid for the house, plus what you paid for the land you built it on.
Level 1

How do I establish the cost basis of a house I built 30 yrs ago as a second home?

not converting to rental property and I sold in 2018
Level 1

How do I establish the cost basis of a house I built 30 yrs ago as a second home?

I built it
Level 1

How do I establish the cost basis of a house I built 30 yrs ago as a second home?

can I include my labor  as cost of building a 2nd home?
Level 20

How do I establish the cost basis of a house I built 30 yrs ago as a second home?

No.  Only costs you pay for out of pocket.  

(Look at it this way, if you considered your free labor as something you paid for to build the house, you would also have to report it as taxable self-employment income.  You'd end up worse that way, if it was legal, which it isn't.)
Highlighted
Level 20

How do I establish the cost basis of a house I built 30 yrs ago as a second home?

Diligently.  Your cost basis is the cost of the land, materials, and labor you paid for.  Plus other required legal costs such as for permits, inspections and surveys.  

If you don't have your records, you have a problem.  If audited, the IRS doesn't have to give you credit for anything you can't prove.


 Taxpayers should always save records related to the purchase or construction of a home for the entire time they own it plus at least seven years after they sell.