Showing posts with label cost basis. Show all posts
Showing posts with label cost basis. Show all posts

Tuesday, July 20, 2010

Selling a vacation home? Tax treatment of furniture can catch you.

Karin Price-Mueller, the BizBrain at the Star-Ledger, fields questions from readers on a variety of matters. Here's one regarding tax treatment of furniture when selling a furnished home. (The question is shown in full.)

Q. When selling a furnished vacation home, can I add to my original basis the replacement costs of the furniture and accessories that came with my condo and that I have replaced over the years, such as TVs, rugs, couches, chairs, drapes and air conditioners? The condo unit was originally purchased for $80,000 plus a $5,000 furniture package, and we sold it furnished for $250,000. While I rented it out at times, I didn’t depreciate it. It was primarily a vacation home.

— Bob

"A. Even though you bought the home furnished all those years ago, you can’t include the furniture as part of your cost basis."

Essentially, you can only add improvements to the cost basis of the home, not furniture.

"Some examples of capital improvements that would qualify as an increase in cost basis include the cost of putting an addition on the home, replacing the whole roof, installing central air-conditioning, paving the driveway or rewiring the home."
"Adding the furniture to the cost basis is only asking for trouble, said Douglas Duerr, a certified financial planner and certified public accountant with U.S. Financial Advisors in Montville. "

Read the full article Furniture sold with home does not count toward cost basis.

And, as always, we recommend you speak to your tax advisor when undertaking any major financial transaction.

For your next title order or
if you have questions about what you see here,
contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453,
Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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