In this case, it seems like the person might want to push
the envelope in the other direction and view the plumbing as
long-term. I say this because I'm assuming the person did
not take the plumbing (and the roof) in the year paid,
right?

-Doug

PS By the way, this is what I love about taxes. People
want to be honest, but they don't want to be pushovers.
They want to claim what they reasonably can.

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CrossedSwords[at]webtv.net posted:

- quote -

Yes, so long as they were truly "improvements." There's a
line drawn between improvements and maintenance. Plumbing
is very close to the line: e.g., a new powder room or
shower stall is a definite improvement; fixing a leak or
clogged toilet is definitely _not_.

"Improvements" are described in Pub 17 as "having a useful
life of more than one year, increasing the value of the
property, lengthening its life, or adapting to a different
use."

You add the cost of such items to your total cost basis --
recorded in your own records. There is no change necessary
on tax forms, as the only entries are "Proceeds" and "Cost"
(which is where you enter the total basis figure). Accurate
records are advised, in the event of an audit.

Bill

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CrossedSwords[at]webtv.net wrote:

- quote -

Neither. If the expenditures are truly improvements, and
not just repairs and maintenance, you simply add them to
the basis and enter the total, as a single number, on
Schedule D.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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Sold second home in '06. Will declare as Long-term capital
gain on 1040D. Can I use any home improvements, e.g. roof,
plumbing to offset gain? I have enough documentation of
such that would bring my gain down next to nothing.

If so, do I simply put "adjustment to basis" or do I have to
list specific improvements?

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