Home Improvements to defray capital gains?

[SensibleandHourly]

Good morning, 

Hmmmmm, client sold a home he picked up for a song originally intending it to be a rental. Made a tidy 80k when he sold it instead. He is convinced that he read 'somewhere' that if he put the profits into his primary residence to improve it, that it would be a write-off. Am I missing something here, because I would have thought the improvements would have had to have been made to the house he sold rather than the house he kept? 

Thank you, Community! 

**How many more days??????????**

[Just-Lisa-Now-]

"put the profits into his primary residence to improve it, that it would be a write-off"

No, that's not a thing.  Must have seen it on TikTok or one of the other media sites that distribute tax  strategy bull$hit.

[GodFather]

"read somewhere"   😊👌

Kudos to him for trying though. 

[IRonMaN]

He bought the house for a song and he listened to another song being played backwards for his tax advice.  Time to pay the tax and move on.

[Camp1040]

Do not read any tax publications.....just listen to your barber or hairdresser! I have had 3 folks so far this year that insisted that they could reinvest their gain into another property, sans a 1031 exchange!

[taxes96786]

Ask the client to obtain the IRS rule from his source of this information so you can review it. Tell him that without review for possible deductibility it is definately not deductible. I do this whenever a client takes advice from a non tax pro.

[qbteachmt · Accepted solution]

"He is convinced that he read 'somewhere' that if he put the profits into his primary residence to improve it, that it would be a write-off."

Ha. Nearly 30 years ago, there was a capital gains reinvestment provision for primary residences that was removed. I'm surprised how many people try this one, though.

Which this, apparently, is not his primary or any of his residence(s). It is either a rental, or it ended up being a flip (investment that got sold). It was never his primary residence, so let's not bring zebras to a gun fight.

Wrong on those two counts, at least.

And then teach him about improve vs expense.

[SensibleandHourly]

Happy Friday and thank you everyone for the good advice! At this point in the season, a little wider perspective is greatly appreciated!!!!