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Updated almost 3 years ago,
Selling property--Can eviction expenses add to cost basis?
Hey BP forum,
After a few years of owning a rental property, I am looking forward to selling it this year. I was considering a 1031 exchange, but lately I've been thinking that if the capital gains tax is low, I may choose to simply sell it. Since buying, I've invested in some major improvements which I understand I can add to the cost basis of the home. I am also wondering if there are any other expenses I can add to the cost basis, such as eviction-related expenses. I unfortunately had to experience going through an eviction during the pandemic and it cost me tens of thousands of dollars in legal fees and property damage...not to mention the 8 months of uncollected rent. I ended up settling with the tenant and letting them leave without owing anything due to bleak outlook on getting anything done with the California courts.
Does anybody know if these eviction-related expenses can count toward the basis? Any other related insight/advice is much appreciated!!
Jake