[ASB]

I am planning to purchase a parking space, which is in another bldg, as mine does not have a garage, with cash, so when I sell my home I can sell it with a parking spot which most people looking for a condo my size want.If I sell the spot for the same amount as I purchased it for, next spring, do I have to pay taxes on the entire amount that I get from the sale.

So, if I purchase the spot for say 20,000(with after tax dollars) now and sell it for 20,000 next spring with my condo, will the 20,000 become taxable income unless I roll it into something else that is real estate.
Or is the gain only considered as income?


Would like to make my home easier to sell in this tough market but do not want to lose money doing so.

[ScottGem]

The purchase of the parking spot would be considered an improvement to your property. It would then raise the tax basis for the property, the same as if you added a room to a house. The total tax basis is then used in calculating profit on the sale of the property.

[ASB]

I have lived in my condo for 2 years so I know that I do not have to pay taxes on the gains but I would not have owned the parking spot for 2 years. So, if I sell the home and spot together and the spot is considered an improvement to my property can I assume that I continue to not have to pay taxes on my gains?


Also, my confusion is that if I sell my home and go back to renting and my money is not in real estate any more, does all of the money I get for my real estate become taxable income for the year I sold it in?

[Fr_Chuck]

No, all of the money is not taxable income, only the profit you make,

You need to sit down with the person who does your taxes and let them give you some estimates from your estimated sell price and your purchase costs.

[ScottGem]

Yes, the improvement doesn't have to follow the time limit. So its just added to your tax basis.

[ASB]

Thanks Chuck, Scott. Your answers helped a lot.