Capital Gains and Losses
Questions and comments about tax rules for buying and selling stocks, mutual funds, real estate and other assets.
capitalization of expense to lower CG
Posted by: stuartb, December 17, 2017 05:57PM
Need clarification.

I have been deducting prop taxes (only the ad valorem amount on Sch A) on a vacant lot owned for years. Due to the pending tax bill's $10K limit, I can no longer do that since the $10K will be used up by my home's prop tax. Rather, I plan to capitalize the property taxes on the lot (via an election under section 266) in order to increase the lot's basis and lower the capital gain upon sale.

Question: Can I capitalize the full property tax amount or only the ad valorem amount?

Thanks.



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