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What am I missing here???


Hahn1040

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Client sold a piece of land with a house and a store to the state of TN for a new road.

she had been in negotiation with the state for almost three years for the price.  During that time, she spent over $20,000 on the house to "Increase the market value, so they would pay more"

They finally settled in 2016.  They did not pay any more than first offered.

so during that time, she put on a new roof, new carpeting, $7,000 carpentry... all for a house that will be torn down?   

She and her brother had inherited the property from Daddy in 1984.   Of course, she has no records of value of any of it back then.  (she is working on it) Brother gave her his half some years back when he was going through a divorce.  So now she gets to pay tax on the entire gain (she is already in the 35% tax bracket before this) and then she will gift him his half of the proceeds.  Family had lived in the house off an on  over the years.  No one was living in it at the time, so no real need to keep the house inhabitable... 

Yikes!  Why didn't she just sell it to TN when they first asked instead of putting all of that money and time into it!!!

Rant over....

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Have these folks been your client for a while?  I have a suspicious  someone  advised them to make  the improvements to reduce  their loses, I would ask for prove of payments for the improvements, I once had someone tell me I bought a 20K kitchen for 6K but I would like to the 20K of improvements.

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