18 Nov I don’t have receipts for home improvements. What will the IRS say?
Q. I bought my house for $180,000 in 1989 and have lived in it since then. I expect to be able to list it for $480,000. I qualify for the $250,000 capital gains exemption, leaving a potential profit of $50,000. I have made many, many improvements to the house, both major and minor — I just made a list of 38 — but I don’t have receipts for most of them. Is it possible to have those improvements evaluated by inspection?
— Seller, soon
A. Congrats on having an anticipated profit when you sell your home.
Thirty-eight? That’s a lot of improvements.
Without receipts to verify the purchases, there is no guarantee the IRS will approve estimates, said Kenneth Bagner, a certified public accountant with Sobel and Co. in Livingston.
And unfortunately, an inspector generally will not sign off on any estimated costs of improvements, he said.
“If you are audited without receipts, you do this at your own risk,” Bagner said. “Suggestions would be to discuss with contractors you worked with, see if you can find your contracts, ask neighbors for affidavits, check for permits you filed with the town for improvements, look for any paperwork you saved on the purchases, look for old bank statements and credit card statements.”
Those kinds of documents may be enough to convince an agent that your numbers are reasonable, Bagner said.
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This story was originally published on Nov. 18. 2022.
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