sale of home

[grandmacroft]

Sold by 83 year old, lived in 25 years.  Looks like a gain of about 217,000 if all upgrades allowed.  What will my taxes be on the sale.  Is there a list of upgrades that are allowed?  I know painting isn't, are major landscaping items allowed?

[drc845443]

Since you lived in your home for 25 years, you may not have to pay tax on the gain on the sale of the home.

If you own and live in your home for at least 2 out of the last 5 years,  and you meet other conditions, then the gain on the sale of the home is tax free up to:

• $250,00 if you are single, or
• $500,000 if you are married and filing a joint tax return.

In calculating your gain, you can deduct the cost of significant improvements made to the home during the period that you have owned it.  Major landscaping would be considered a capital improvement if it adds to the value of the home. There is no comprehensive list of capital improvements, but here is a link to a resource with examples:

Publication 523 (2022), Selling Your Home | Internal Revenue Service (irs.gov)

Please refer to the section entitled "Examples of Improvements That Increase Basis" - you will see Landscaping is included as one example.

[EleanoreS]

Good evening Grandmacroft,

Congratulations on the sale of your home.  

You are allowed to exclude from income up to $250,000 of gain on the sale or your personal residence. With a gain of $217,000; you will have no tax on the sale of your home .

Capital home improvements  can be added to the original cost basis of your home.  

This IRS publication has a lot of information on the sale of your home including a comprehensive list of improvements on page nine.

Thank you for reaching out to the TurboTax Community

[Sean Enrolled Agent]

Hello grandmacroft,
You stated that the homeowner lived in the house for more than 2 years, closer to 25 years.

If the homeowner is single, they don't have to pay capital gains taxes on the first $250,000 in gains.
If the homeowners are married and are filing as married filing joint, they don't have to pay capital gains taxes on the first $500,000 in gains.

There are quite a few expenses that can be used to increase the cost of the home, helping to reduce the overall profit being made.
Your adjusted basis includes what you have invested in the home. Usually the cost of the home plus the cost of any capital improvements that you have made. 

As you stated, routine maintenance and minor repairs, such as painting the home, is not included in expenses for maintaining a home.

Major improvements include a new roof, remodeling part of the home, adding a central air conditioning unit.  These expenses are added to the original cost of purchasing the home which are then subtracted from the amount of gain that you have on a sale. 

For more information, feel free to review the following TurboTax websites regarding tax aspects of home ownership: 
https://turbotax.intuit.com/tax-tips/home-ownership/tax-aspects-of-home-ownership-selling-a-home/L6t... 

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-credits-deductions/sold-home-deduct/... 

Thanks,
Sean