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

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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