Painting as an Expense of Sale

[Kram BergGold]

My client painted the interior of his home just before selling it. His gain is over $250,000. As painting is not an improvement, can it be added to the other sales expenses?

[ATSMAN]

I seem to recall that most costs associated with preparing the property for sale and selling it may qualify as a deduction. I can't give you a cite right now but the case involved a sale where the buyer and seller agreed on certain repairs before the sale would close.

[Rapid Robert]

No, re-painting the interior is neither added to basis nor is it a sales expense. It is a non-deductible personal expense.

Per Pub 523, "Examples of improvements you CAN’T include in your basis. You can’t include: Any costs of repairs or maintenance that are necessary to keep your home in good condition but don’t add to its value or prolong its life. Examples include painting (interior or exterior), fixing leaks, filling holes or cracks, or replacing broken hardware."

As for selling expenses, those are transaction costs of the sale itself. The condition of property pertains to the thing being sold, not any transactional costs of the sale itself. Examples of selling expenses are sales commissions, advertising, and legal fees. Again, see Pub 523, worksheet 2.

[ATSMAN]

Exception. The entire job is considered an improvement if items that would otherwise be considered repairs are done as part of an extensive remodeling or restoration.
Depending on the facts and circumstances most people do some improvements to the kitchen or bathrooms before selling. I know when I sold my home the buyer's agent wanted granite countertop instead of Formica and the driveway repaved.

[kathyc2]

No, re-painting the interior is neither added to basis nor is it a sales expense. It is a non-deductible personal expense.

Per Pub 523, "Examples of improvements you CAN’T include in your basis. You can’t include: Any costs of repairs or maintenance that are necessary to keep your home in good condition but don’t add to its value or prolong its life. Examples include painting (interior or exterior), fixing leaks, filling holes or cracks, or replacing broken hardware."

As for selling expenses, those are transaction costs of the sale itself. The condition of property pertains to the thing being sold, not any transactional costs of the sale itself. Examples of selling expenses are sales commissions, advertising, and legal fees. Again, see Pub 523, worksheet 2.

I think it would depend on the circumstances. Granted, if the painting was done 2 years ago it would not qualify. If the painting was something like changing colors to a more neutral color to attack more buyers, I could make an argument that it was a selling expense.

[TAX4US]

I think it would depend upon the asset being sold. It seems I read somewhere if the outside were painted it could add to basis since this type of paint is supposed to last more than 1 year. Just my 2 cents worth. Your mileage may be more.

[ttbtaxes]

I would look to see what the painting's connection was to the sale. If it can be shown to be directly related then I would deduct it as an expense of sale.

RR 58-266, RR 71-334:

"Direct expenses incurred in connection with the disposal of coal or timber subject to the provisions of section 117(k)(2) of the Internal Revenue Code of 1939 reduce the amount received for the purpose of computing gain or loss from such disposal of coal or timber. Whether any expense is a `direct expense' is a matter to be determined largely on the strength or persuasiveness of the facts of each particular case and how closely related are the activities in connection with which the expense is incurred to the disposal of the coal or timber."