Legal Question in Real Estate Law in California

Hello, Thanks in advance for any response.

Bought land for investment 15 yrs ago for $240,000. Have not touched it ,or improved, or enjoyed it since. Have offer to buy now for $500,000. I did not declare any tax deductions over the years (nothing on Fed or State taxes regarding this property), may have been mistake. Obviously I do not want a $260,000 capital gains. Over the years, I paid $30,000 in real estate taxes and $120,000 in loan interest. Is there any way I can add those to cost basis now at selling (240+30+120=390K)? That would reduce capital gains to more acceptable (for me) $110K. If impossible most likely will be forced the 1031 route.

Thanks-Jim


Asked on 5/15/21, 10:21 am

1 Answer from Attorneys

Timothy McCormick Law Offices of Timothy McCormick

I'm afraid not. You can't add expenses to your basis in real estate. Only improvements can be added to the basis. You should consult a tax accountant about whether you can file amended returns to recoup some of the interest and tax expense.

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Answered on 5/15/21, 2:29 pm


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