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19 September, 14:41

One reason Congress expanded the exclusion of gain on the sale of a principal residence and eliminated the deferral provision was to eliminate the need for many taxpayers to keep records of capital improvements that increase the basis of their residence. Why might taxpayers still need to maintain such records to substantiate the ad-justed basis of their principal residence?

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  1. 19 September, 17:50
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    The answer is:

    If the gain resulting from selling their principal residence exceeds $500,000 for a married couple or $250,000 for a single filer.

    The taxpayer doesn't qualify for the capital gains exclusion (e. g. maybe sold another property during the last year)

    The taxpayer uses his principal residence for rental or commercial uses and depreciation may be allowed.
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