Selling land, what expenses be deducted to offset capital gains

[kleintc1]

I sold my recreational land this year.  Need to know what expenses can be used to adjust my cost basis (websites say you can increase your cost basis by using some closing costs when you bought it, and other things, but they don't detail what those are), and offset the selling price (i.e. realtor fees, replacing a roof, land improvement, etc.) to lower capital gains.  

Just seeing if these are listed somewhere on TurboTax or elsewhere, or if anyone knows the most common ones are.

[DianeW777]

Add the cost of the improvements as part of your purchase price.  You can increase your cost basis by the purchase ( and sales) expenses and those would be:

1. Real estate commissions
2. Transfer tax
3. Legal fees
4. Advertising fees
5. Home inspection reports
6. Title insurance
7. Geological surveys
8. Loan charges (points) or other fees paid on the buyer's behalf

Sales expenses do not include:

•  Mortgage payoffs
•  Home equity loan payoffs
•  Rent-back costs
•  Payoff to creditors
•  Property taxes
•  Home owner association fees

[KrisD15]

It depends. 

If this is not a BUSINESS you can't.

If this is being held as an investment, you can't claim expenses such as travel. Only costs that affect the basis would count. (What it cost you to purchase it)

If this is a building, and you "Materially participate" you could claim expenses, such as gas or mileage.  However, you would need to list the vehicle as a business asset, and the IRS could question how you could materially participate in something that was located so far away. 

[Nan2C]

Thanks for your reply

[ThomasM125]

You can't deduct the routine maintenance costs while the property is not available for rent. However, if it is a second home, you can treat the mortgage interest and property taxes as itemized deductions. Also, major improvements can be added to the cost basis of the property to reduce your gain when you sell it.

[WACR]

Question: when selling land (vacant lot)  bought as an investment can I deduct property taxes payed while holding the lot?

[KristinaK]

Yes, you can. It will go on Schedule A, if you itemize. 

Remember, the deduction of taxes on Schedule A is limited to $10,000. So if you are itemizing, but have other taxes (state income tax, as an example), it might be a "waste" of a deduction. In that case, it may be better to elect to add the taxes to the cost/basis of the property. 

I suggest you preview your Schedule A and see what the total amount of taxes on line 7 you are currently showing. 

Where do I enter my real estate taxes in TTO?

[LadyChuck]

Can the cost of a tractor purchased to clear bare land be included in the cost basis of the land? 

Can a storage shed built on the property be included in the cost basis of the land?

Can a storage unit placed on the property be included in the cost basis of the property?

[RobertB4444]

Permanent fixtures increase the cost basis of the land.  So the tractor does not - it's a vehicle and not a permanent fixture.  Whether the two storage units are permanent or temporary is a judgement call.

@LadyChuck 

[DRM545]

Did you figure out if you bought the tractor to use to clear the land where you build the cabin and shed if you could deduct any of the expense.    Also if anyone knows what if you sold the tractor back to the dealership you purchased it from for a lot less than you paid, how to report it?

[Vanessa A]

A loss on the sale of personal property is not deductible or reportable.  If you sold it at a gain, you would need to pay taxes on the gain, but there is no "benefit" for the loss. 

The purchase of the tractor is not part of the cost basis of the land.  Basically, purchasing the tractor does not give you any tax benefits when it comes to your property.