Members of the Maryland Association of Certified Public...

TAX ANSWERS

April 13, 1995

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

Q: We sold our house this year and broke even except for the $10,000 we spent for a new kitchen and about $6,000 for a new bathroom. How do we go about deducting these costs?

A: If you sold your home for the same amount you paid for it, then you would have no gain or loss and therefore no tax consequences. When you add the $16,000 in home improvements to the original cost, you now have a loss on the sale of the home. A loss on the sale of a principal residence is not tax-deductible. You should report the transaction on Form 2119.

Q: I owned a Prince George's County zero-coupon municipal bond. The bond was called and I received the face value. How do I handle this on my tax return?

A: This is taxable on both your state and federal returns. Your capital gain or loss will be calculated on the federal Schedule D by subtracting the original cost of the bond and the amount of accumulated interest earned from the net proceeds received.

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

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.