Hello David,

Thanks for the reply. I apologize for taking so long to
reply... but after checking the replies for 4-5 days and
seeing none, I assumed incorrectly that nobody would reply!

Thanks again!

Pat

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Patrick" <patrizio[at]canada.com> wrote:

- quote -

1) yes.
2) no. An election needed to be made for the years those
expenses were paid.
3) yes.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Greetings,

(1) In 6/2003, my daughter bought 2 acres or rural land
thinking she was going to build on it-- and then sold it
in 6/2005 for a $8,000 profit. While she kept the
property, she did not deduct any of the interest she
paid on the loan --I provided the loan-- nor did she
claim the (San Antonio) property taxes. She did
not/will not itemize in 2003, 2004 and 2005 since the
family standard deduction is much higher that the
itemized deductions.

(2) I provided the loan money and charged her interest on
the loan. I reported the interest to IRS each year and
gave her a statement as to the interest paid.

Question(s)

(1) When she computes her base price -- the real cost of
the property--I presume she can add to the cost of the
land, all the closing costs she paid, e.g.$400.

(2) When determining her net profit, can she deduct from the
gross sale price of the land
(A) the taxes and interest paid in 2003, 2004 and 2005 or
(B) only the taxes and interest paid in 2005? As best as
I can figure out, she can only deduct the 2005 interest
and taxes.
_________________________________

(3) When she sold the land in 2005, she had to pay some
closing costs (e.g., $800.00; --$300 closing costs and
$500 for the Title Policy). I presume she can deduct
both the cost of the paperwork AND the cost of the Title
Policy.

As Always, THANKS!

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >