Whether you’re downsizing or expanding, if you are selling a property, it’s an
unappreciated fact that the repairs, improvements and some expenses on your Real
Estate holdings get better with age. That’s the good news. The bad news is if you’re not
reinvesting your profits, you may be subject to Capital Gains tax.
Here are at the basics: a Capital Gain is calculated by subtracting the Adjusted Cost Basis
from the Sale Price. This is not complicated, the “Basis” is what you paid for the
property, plus improvements and repairs. That Basis is then subtracted from the current
Sale Price, determining the “Gain.” If you sell a property for more than you paid and
invested for improvements and repairs, you have a Capital Gain. If you sell a property
for less, you have a Capital Loss.
So, remember that costly and painful roof or plumbing repair could be money in your
pocket and added to the Basis along with all documented costs expended for improving
and repairing your property.
There are variations on the Capital Gains rules between Commercial and Residential
properties, but improvements and repairs are added to the Basis on both when a
property is sold. The IRS expects taxpayers to keep the original documentation for
capital assets, such as real estate and investments. They use these documents, along
with other third-party records, to verify the Cost Basis of assets, so be diligent in your
accounting.
Finally, the “return to the office” trend will continue in 2025 and many companies are
reclaiming the energy that was lost with exclusively remote workforces. The statistics
vary, but large and small companies appear to be adopting some variation of an in-
person workplace. The result is a great deal of movement and exciting activity for
buyers, sellers, owners and landlords.
As always, my best advice involving any negotiation, contract or transaction is to consult
your Tax and Legal Professionals.