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Thanks. That is what I thought. I figure with pictures (before and after), and a clear description of my methodology, that I would have a reasonable chance of acceptance.
If you qualify for the up to $250,000 ($500,000 if MFJ) capital gain exclusion on the sale of your home without the cost basis improvements, there is no need to document the improvements.
To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale (closing), you must have:
Owned the home for at least 2 years (24 months) (the ownership test), and
Lived in the home as your main home for at least 2 years (24 months) (the use test).
If you qualify for the capital gain exclusion, you do not have to report the gain on the sale of your personal residence on your federal tax return unless the gain on the sale was greater than the exclusion, you rented the home out, you claimed a home office deduction, or you received a Form 1099-S for the sale of the home.
Thanks for the further input. I know it sounds like a bit of whining but here in the SF bay area the exclusion will be exceeded and I am hoping to mitigate the impact.
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