Expert: Dan Griffin - 2/6/2009

Question
Dear Mr. Griffin,
I helped my parents build a second home by a lake in Pennsylvania in the early 70's. My father has since passed away and my mother is now living with me and I am handling her affairs. I sold the second home last year and now need to account for this on the federal tax return. There are no records or receipts of the expenses in building the home. My parents used their labor, my labor, friends labor, and hired specialists when needed. I was thinking of using an average home cost for the early 70's and subtracting out the labor cost of this average home to guestimate the basis. Can you suggest what a typical split of materials and labor might be for a "typical" house? Would it be around 30% labor and 70% materials for example? I do have the land cost, so i can factor that in. The realtor was not able to help regarding prices in the 70's. If you other suggestions, that would be great.
Thanks
Tony

Answer
I think your best advice would come from a tax person.  Construction costs usually split close to 50% labor/material.  Land acquisition and Builder's profit and expenses would be in a different accounting.  I've not been trhough a similar problem so can offer little help.  I would expect a good tax man to have been through something similar.