Fixing-up Expenses

Fixing-up Expenses

The Fixing-up Expenses are.

expenses incurred for the purpose of physically preparing a personal residence for sale. Qualified fixing-up expenses may be deducted from the sales price to determine the amount (the adjusted sales price) that must be spent for a new residence in order to defer capital gains taxes on the sale of the old one. Former IRC (check if this IRC provision is current here) § 1034.

Example of Fixing-up Expenses:

Learn more about tax examples, explanations and calculations here.

Abel spends $500 for painting and repairs on his home before selling it. The house sells for $75,000, and the transaction costs are $7,000. Abel's adjusted tax basis is $50,000. Abel must spend at least $67,500 on a new residence within 2 years to avoid capital gains on the sale. The potential capital gain is $17,500 ($67,500 less $50,000).

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.

Description and Definition of Fixing-up Expenses

Expenses incurred to prepare your home for sale which make your home more saleable. Improvements are not fixing-up expenses. You subtract fixing-up expenses from the amount you realize from the sale. With the new exclusion for most gains from home sales fixing-up expenses are not usually as important as they were under the old rules.

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