I purchased my father-in-law's home in 1996 when he was in financial distress and was about to lose the home. I paid fair market value for the home of $127,500. His wife just passed away and, at age 83, the house is too much for him to handle. So, we are selling. I never charged him rent and paid the property taxes. He paid the insurance. I also helped with substantial improvements: replaced the HVAC system, replaced all the windows, replaced the driveway and garage cement floors, replaced the roof. Can any of these expenses be deducted before computing the capital gains? Is the rate of capital gains the sales price less the cost basis plus the realty fee multiplied by 15%? This is confusing to me since there was no rent charged over the past 16 years.