Members of the Maryland Association of Certified Public...

TAX ANSWERS

March 21, 1995

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: I bought a lot in Ocean City several years ago and built a home on it. I have the receipts for most of the building materials, but I'd like to know how I can figure my labor and how I arrive at a price for the total cost of building the home, to determine a basis for a capital gain. I'd also like to know if I can deduct transportation to and from Baltimore to Ocean City and lodging during the time spent there working.

A: The total cost of the building, and basis for capital gain, is equal to the cost of the lot when purchased, plus cost of all construction materials and paid labor. You do not calculate a cost on your personal labor to construct your property. And you cannot deduct the travel and lodging expenses incurred during the construction period, unless the property is held for rent.

Q: I have a front-footage assessment charge for water and sewage of $300 every year. Can I claim the front-footage assessment charge as a deduction?

A: It depends; taxes assessed against local benefits are generally nondeductible because they increase the value of the property. But, if the charges are allocable to maintenance, repairs or interest charges, they are deductible. The burden is upon you to prove the allocation you use.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

To submit a question, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford 836-5028, and in Carroll 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; state the question in full. Push 2 to hear a tax tip. Selected questions will be answered in the Business section.

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