Pond Boss Forums INTRO Questions & Observations When it comes time to sell...

Is this your primarily residence as well? Or a separate property?

Separate. We go there to relax & do some fishing, mostly 2 or 3 days at a time, but even that has been scarce this year due to a series of health issues.

Okay the reason I asked was to rule out the exclusion of gain for primary residence.

Publication 523 is also another resource that has some more details about improvements that count.

As for adding up your costs. There is a rule noted as the Cohen Rule from tax court cases that allows for reasonable estimates to be used for costs in the case records can’t be found/provided
. In general the IRS would/could be satisfied by a reasonable estimate of the cost at the time period, and there is some sort of general evidence that the improvement exists (ie you can see it) that should help with coming up with your adjusted basis add ons. For instance if earth moving work costs $xxxx now, it would be reasonable to assume it was $xxx years ago. Does it align with inflation, your memory, etc. Making common sense goes a long way here. Any and all materials you can find, drawings, permits, etc. help build a strong case.

Hope this is helpful! Let me know if you have further questions.

Thanks so much, Tyler. Very helpful to hear from an expert! I really don't want my wife to go through what my friend did.

I’d prepare what you have been discussing here in terms of improvements, come up with a reasonable estimate of cost and add it all up. Make sure the improvements are something that can be seen or understood by a 3rd party. For instance you wouldn’t want some improvement added that doesn’t exist anymore. Figure for each $10,000 there is you would be saving $2000 in taxes. I’d speak with a local CPA about your sale and the upcoming tax filings and share your information with them for your adjusted basis. I’d get their opinion on what you have, and how much support/evidence you have as a package and if they feel it’s sound enough for the return. Then you can go back and forth on a few items if they are worth the squeeze or not. Most folks having a hell of a time through audit have done some pretty shady things and or are really unorganized. Keep it organized, reasonable, and with common sense I doubt you’d hear from the IRS. If there isn’t any fraud involved the IRS typically only looks back for 3 years for audits. If you do hear from them, it should be simple explanations. The worst part about audits is the additional cost you incur for representation from a cpa or attorney.

Wow. I haven’t been keeping up with costs over the last 40 years. I’ve ignored the idea that I might need to drag out those expenses someday.

BTW, I don’t live there
I really haven’t spent that much. More of a DIY type who hasn’t kept records/receipts as never considered selling. Now, with arthritis and 80 yoa……

Characteristics:

133 acres that cost about $400 per acre a long time ago. Now, like properties with no improvements are going for $8 to 10k per acre. My phone never stops ringing.

Mobile home that I recently had under pinned. Needs work. Actually more of a $6,000 white trash trailer house that I bought a long time ago.

Dozer work to build a road through the place (1 mile).
Dozer work selective land clearing
2 to 3 acre pond when full. That’s rare
1/4 acre pond when full
Spring fed creek when there’s not a drought.
Bunch of deer blinds and feeders throughout the place


Storage stuff:
Shipping container
Construction office trailer
4 bay Tractor shades that I built

Septic system $$$
Water well $$$
Water piped100 underground yards to house and 50 yards to cattle pen. Did those myself
Well house
Electricity
Rented propane tank
Sewer tank and spray system. That got expensive

Approx 3 acres of coastal Bermuda grass

8 ft tall Cattle pen

John Deere with 4WD and FEL
Ford 8N
2 4wheelers

16 ft trailer and 4x 6 trailer plus a converted pickup bed trailer.
Lots of equipment. Bush hog mower, breaking plows, mower, disc, seeder, box blade and probably more.
Several unusable antique plows and old tractor stuff(junk)

Shooting range with stations at 25, 50 and 100 yards
Concrete ramp leading up into the front gate.
Gravel road 75 yards from gate to house
Deer blinds

This is the first time I’ve ever detailed out the improvements and characteristics. Had the place about 40 years but live in Fort Worth area. The property is 80 miles from home.

If I were selling I would advertise about an acre of blackberries started from bird droppings in 3 different places and some wild plum trees. All the rocks that anyone would ever want

Dave, just about the most insanely expensive coffee beans in the world come from civet droppings in Southeast Asia. Maybe you could advertise your bird dropping blackberries as equally special!

Thanks, that makes good cents -- uh, sense.

I lost an awful lot of my wild blackberry vines during our long, and still occurring, drought. One local guy decided not to sell his place until our long drought ends. Good excuse for me also. A running, spring fed creek beats a dry wash. A couple of half full ponds aren’t worth much. 3 acres of almost dead blackberry patches are thorny, dead sticker vines. 2 other patches look pretty grim.

One detraction for my place is some electrical transmission lines that run for about 1/8 mile across a part of it. I plowed and planted coastal Bermuda over about an acre of it. Then , in the Fall, I disk it and plant winter wheat to feed and murder deer. Didn’t do it this year due to no sub soil moisture from drought. I also have a high tower deer stand there.