Expenses to write off?

[Nobuko Morgan]

I have recently bought an really old house and my husband who is contractor has been working on the house.

We are planning to live in and sell after 2 years.

I wonder if any expenses can be written off.  

Any comments or suggestions would be greatly appreciated.

[Ashish Acharya]

Originally posted by @Eamonn McElroy:

@Nobuko Morgan

If it's your primary residence, you may be able to deduct mortgage interest and real estate taxes up to a limit if you itemize.

Otherwise expenses related to a primary residence are personal in nature and not deductible.  Improvements will increase your adjusted basis and reduce your potential gain when you sell, assuming not all of the gain is excluded under Sec 121.

Depending on the nature of the improvements, you may qualify for non-business energy tax credits, which are better than deductions.

Make sure you run what you're doing and what you plan to do by your CPA, as he/she will know all of your facts and circumstances and can properly advise you.

Agreed with the Eamonn. 

Keep in mind that repairs done to the primary residence are not deductible. however there is an exception when you do all the repairs with the major renovation, then repairs can be added to the basis. 

If you your house ever appreciates more than 500k when you sell, the basis will reduce your gain. If not, it really doesn't matter becuase you will not pay taxes up to 500k if you qualify for section 121.