Income Tax Deductions Against Capital Gains

by Jim
(Michigan)

Income Tax Deductions Against Capital Gains

Income Tax Deductions Against Capital Gains

I sold 40 acres after owning it for 23 years. When figuring my taxable gain, can I deduct the 23 years worth of property taxes as part of my basis for cost of the property? Also, I built a barn, planted trees, etc. Are these deductible from selling price?

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Jan 04, 2018
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Income Tax Capital Gain Deductions
by: Stephanie

Thank you for your inquiry about what kind of deductions you can take against a taxable gain on sale of property.

Personal real estate taxes are an annual itemized deduction on Schedule A of a personal tax return; Therefore, the 23 years worth of property taxes would not be included in your cost basis of the property as this would be a double benefit and so is not allowed.

The bard, trees, etc that you paid additional money for that added value to the property can be added to the basis or deducted from the selling price to reduce taxable gain on sale.

You are also able to exclude up to $250,000 for a Single taxpayer and $500,000 as a married tax payer from sale of a personal residence that you lived in for 2 out of 5 years before you sold it.

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