by Clint Coons on August 24, 2010
Have you ever considered tearing down and remodeling your personal residence? Better be careful because the IRS is watching and what appears on its face as an innocuous event can have serious tax ramifications for you down the road. In a recent tax case the IRS was able to convince the Tax Court (Gates v. Comm’r, 135 T.C.) that tearing down and rebuilding your home should have different tax implications than just remodeling it.
As most of you know, Section 121 in the Internal Revenue Code, allows for the exclusion of gain from the sale of property owned and used by the taxpayer as the taxpayer’s principal residence for two of the five years preceding the sale (The excludible amount of gain is $250,000 for single filers and $500,000 for a husband and wife who file a joint return.). Sounds simple enough right? I am sure that is what David Gates thought when started his remodel. Click Here to read more by visiting Clint’s recent post on Bigger Pockets.
Posted by Clint Coons, asset protection attorney, Seattle, WA
