Members of the Maryland Association of Certified Public...

Tax questions

April 02, 1997

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

Q: I sold my house in 1996 and I plan to claim the one-time exclusion for people 55 and over. Can I claim expenses of selling the home, including long-term home improvements and improvements in the last 90 days?

A: Selling expenses, fixing-up expenses and long-term improvements are treated differently. Selling expenses -- including commission, legal fees, title and recording fees -- are deductible on line 5 of Form 2119 (Sale of Your Home). Fixing-up expenses are deductible on line 16 of Form 2119 if they are paid within 30 days from the date of the sale and are for work done during the 90-day period ending on the day you signed the contract to sell your home. Fixing-up expenses include painting, planting flowers, fixing windows, etc. Long-term home improvements are not deductible but are added to the basis (cost) of the property, therefore reducing the gain on the sale of the property.

Q: I began drawing a company pension from a railroad in June. Maryland taxes were not withheld. Will I have to pay a penalty? Do I have to start filing quarterly estimated returns?

A: No. Railroad retirement benefits are not subject to Maryland tax; subtract them on Line 27 of your Maryland tax return.

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

Readers can find an archive of tax questions answered thus far plus links to other tax information on The Sun's Web site -- www.sunspot.net.

Pub Date: 4/02/97

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