Is there a 90 day rule for home repairs to be tax deductible when selling a house?

The good news is that the cost of the mold remediation doesn't just disappear tax-wise, but there are some specific rules about how it's handled. There isn't actually a "90-day rule" for repairs when selling a home in the way you're describing. What you're dealing with is a capital improvement to your property. The $27k you spent on mold remediation gets added to your "basis" in the home (basically what you paid for it plus improvements), which reduces any potential capital gain when you sell. So rather than being a direct deduction on your tax return, it reduces the amount of profit you'd be taxed on from the sale. The timeline between making the repair and selling doesn't affect this treatment - what matters is that the repair was made while you owned the home and before the sale was completed. Keep all your receipts and documentation of the work done.

Just wanted to jump in and mention something that really helped me with a similar situation. I was tracking all these home improvement receipts and trying to figure out how they affected my taxes when I sold my house, and I found this tool called taxr.ai (https://taxr.ai) that was a game changer. I uploaded all my renovation receipts and it automatically sorted which ones counted as capital improvements vs repairs, plus it calculated how they affected my home's tax basis. It saved me from making a costly mistake on my taxes since I had some major electrical work done right before selling (kinda like your mold situation). The best part was I could just take a picture of my closing documents and receipts, and it explained exactly how everything should be handled tax-wise. Might be worth checking out since your situation has those timing complications.

Just wanted to update - I tried taxr.ai after commenting here and it was actually super helpful! I had almost given up on figuring out which of my home improvements would count toward my basis, but the tool made it really simple. I took pictures of all my receipts (even the crumpled ones from 3 years ago) and it categorized everything correctly. It also showed me that some repairs I thought wouldn't count (like fixing a leaking roof) actually did increase my home's basis, which saved me about $3k in capital gains tax. Wish I'd known about this before stressing for months about my tax situation!

Had a very similar mold situation when selling my house last year. I spent weeks trying to get through to the IRS to confirm how to handle it on my taxes. Phone lines were always busy, couldn't get a callback, total nightmare. I finally used Claimyr (https://claimyr.com) after seeing it recommended in another thread. They got me connected to an actual IRS agent in like 20 minutes when I'd been trying for weeks. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed exactly how to handle the mold remediation costs on my tax forms. Turns out I was doing it completely wrong and would have likely triggered an audit. Definitely worth using if you need to confirm anything tax-related directly with the IRS instead of relying on internet advice.

Had to come back and eat my words. After being skeptical about Claimyr, I decided to try it because I was desperate to sort out my rental property depreciation issue before the filing deadline. Holy crap, it actually worked exactly as described. After trying for THREE WEEKS to get through to the IRS myself, Claimyr got me connected to an agent in about 35 minutes. The agent clarified my question about rental property improvements vs repairs (similar to the mold issue in this post). For anyone with the home repair/sale issue like the original poster - the IRS agent confirmed that the 90-day rule isn't a thing for capital improvements. As long as you have documentation and the improvement was made while you owned the property, the timeline doesn't matter for basis adjustment purposes.

To add another perspective - we had a similar issue with a roof replacement right before selling our house. Our accountant told us to make sure we specifically called it a "capital improvement" in our documentation, not a "repair." Apparently the IRS treats those very differently. Repairs (like fixing a broken window) generally aren't deductible for personal residences or added to basis, while capital improvements (like replacing all windows) get added to your basis. The mold remediation would almost certainly count as a capital improvement since it adds value to the property.

kind of off topic but this is exactly why i just rent lol. between property taxes, repairs, improvements, selling costs, and now all this complicated tax stuff, i dont think homeownership is worth the headache anymore. especially with the prices these days!

Just to clarify one more important point about the timing - the fact that your first buyer backed out doesn't affect the tax treatment at all. What matters is that you made the improvement while you owned the property and before you completed the sale to your eventual buyer. The $27k mold remediation will definitely increase your home's basis (cost basis), which reduces any potential capital gains when you sell. Keep all your receipts, invoices, and any documentation about the work performed. This includes the inspection report that identified the mold issue, estimates you received, and proof of payment. One thing to consider: if this was your primary residence and you lived there for at least 2 of the last 5 years, you may qualify for the $250k (single) or $500k (married filing jointly) capital gains exclusion anyway. But having that $27k added to your basis is still valuable insurance in case your gains exceed those thresholds or for future reference. There's no "90-day rule" for improvements like this - that might be something you heard about a different tax situation entirely.

Just wanted to add some additional context that might help clarify things for anyone else in a similar situation. The confusion about a "90-day rule" might stem from other tax provisions that do have timing requirements, but as others have correctly pointed out, there's no such rule for capital improvements when selling your primary residence. What you experienced with the mold remediation is actually pretty common - unexpected major repairs during the selling process that end up costing way more than anticipated. The silver lining is that these types of substantial improvements (anything that adds value, extends useful life, or adapts the property for new use) do get added to your cost basis, which is exactly what happened in your case. Since you mentioned the timeline stretched to about 4 months, I just want to emphasize that even if it had been 6 months or a year, it wouldn't change the tax treatment. The key factors are: 1) You owned the property when the work was done, 2) The work was completed before the final sale, and 3) You have proper documentation of the expenses. Keep all those receipts safe - not just for this year's taxes, but for your records going forward. Good luck with everything!

I can definitely understand the confusion about timing rules - there are so many different tax provisions with various deadlines that it's easy to mix them up! The good news is that for capital improvements like your mold remediation, the IRS is pretty straightforward about the treatment. One thing I'd add to what others have mentioned is to make sure you're documenting not just the receipts, but also the reason for the work. In your case, having that inspection report showing the mold issue will be helpful context if you're ever questioned about why this was a necessary improvement rather than just routine maintenance. Since you mentioned this was way more expensive than expected, you might also want to check if any of the work came with warranties or guarantees. While it doesn't change the tax treatment, it could be valuable for your peace of mind going forward, especially since mold issues can sometimes recur if not properly addressed. The fact that you got everything properly remediated before completing the sale shows you handled the situation responsibly, even though it was stressful and costly at the time. At least now you know the tax side is taken care of!

Just wanted to chime in as someone who went through a very similar situation last year. We had foundation issues discovered during inspection that cost us $22k to fix, and the buyer also backed out afterward. Like you, we were worried about timing and whether we could still count it toward our basis since it took several months to find another buyer. The good news is that everyone here is absolutely right - there's no 90-day rule for this type of situation. The IRS considers the timing to be when you owned the property and when the work was completed, not when you actually close on the sale. We ended up being able to add the full foundation repair cost to our basis even though it was 5 months between the repair and our eventual closing. One thing that really helped us was organizing all the documentation chronologically - the inspection report, estimates, invoices, proof of payment, and even correspondence with contractors. Our tax preparer said having everything well-documented made it much easier to justify the basis adjustment. Mold remediation definitely qualifies as a capital improvement since it addresses a health/safety issue and adds value to the property. Keep all those receipts - that $27k isn't lost money from a tax perspective!