VA Renovation Loan - Does seller pay cap gains on increase?

[Nick Klomstad]

I am selling my first investment property and I am curious what the tax implications are in this scenario.

The buyers are attempting to complete $30k worth of work that will pursuantly be added to the purchase price of the property. I am told that this is a selling cost and that I shouldn't have to pay capital gains on the additional amount ($4700).

How is it that the new 'purchase price' (175k vs. 207k) won't have an impact on equity/taxes?

Nick