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If you buy a messed-up foreclosure, and spend some money fixing it up... does that change the basis?

If you buy a messed-up foreclosure, and spend some money fixing it up... does that change the basis?

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E.g.:

You buy an abandoned foreclosure for $100k. It's messed up. All the plumbing, etc. needs to be replaced.

So, (say) you spend $20k fixing it up.

Then, you sell it for $150k.

Did you make a $50k profit on it or a $30k profit on it?

How to convince the IRS that you only made a $30k profit on it?

submitted by /u/another_lease
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/wbr7va/if_you_buy_a_messedup_foreclosure_and_spend_some/
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