Gains Minus Improvements..how?
Example:
Purchase for $125,000
Spend $50,000 in renovations using hard money loan and one basic GC.
Will probably sell for $230,000 range.
The GC btw, is worthless and if I needed to have him sign something for tax purposes, I doubt he would. We will be lucky to finish 60 days past agreed completion date or anywhere near budget.
How do we show what we have spent using the hard money? We definitely want to avoid taxation on the $230-$120, as it is not a true gain.
Any advice?
Suntzu18
You do have cancelled checks, right? You have a contract that specifies the work, right? You have the contractor's interim bills or draw requests, right?
You should have a sufficient paper trail to document the cost of the renovation and to adjust your cost basis accordingly.