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posted Jun 4, 2019 3:07:33 PM

I had work done in my back yard around the house and I spent over $7,000 and need to know where to put that deduction.

I hire the person and I don't have any employee ID to put in.

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Level 2
Jun 4, 2019 3:07:35 PM

It sounds like you had work done in the back yard of your personal residence.  Expenses for work done on your residence (or yard) are generally not deductible.  But you can add to your basis of the house the part of the work that created an improvement to it (and not a redo of what is there).  Then when you sell the house, your gain would be figured on a higher basis, which would reduce the amount of your gain.  For example, if you added a gazebo in the back yard to an area that had been grass, the cost of building it would be an improvement to your property.  If you spent $7,000 on that, and you had paid a total of $300,000 for your house, your basis would now be $307,000.  Ignoring the up to $250,000 or $500,000 deduction for gain on the sale of your primary residence, if you then sold your house and netted $500,000, your gain would be $$193,000, not $200,000.  You would have to wait until the house is sold to realize any tax benefit.

1 Replies
Level 2
Jun 4, 2019 3:07:35 PM

It sounds like you had work done in the back yard of your personal residence.  Expenses for work done on your residence (or yard) are generally not deductible.  But you can add to your basis of the house the part of the work that created an improvement to it (and not a redo of what is there).  Then when you sell the house, your gain would be figured on a higher basis, which would reduce the amount of your gain.  For example, if you added a gazebo in the back yard to an area that had been grass, the cost of building it would be an improvement to your property.  If you spent $7,000 on that, and you had paid a total of $300,000 for your house, your basis would now be $307,000.  Ignoring the up to $250,000 or $500,000 deduction for gain on the sale of your primary residence, if you then sold your house and netted $500,000, your gain would be $$193,000, not $200,000.  You would have to wait until the house is sold to realize any tax benefit.