Capital gains

[Fred Ramos]

We purchased a foreclosure last year and have been working on it (remodeling) since then. We are finally tired of working every weekend so we've found a buyer who will purchase as is (not completed).
of course, in last years taxes we had plenty of write-off for this rehab and we
have continued it into this year.
our question is, since we will be selling the property for more than our purchase price, will we be liable for the capital gains tax on everything above our original purchase price or will we be able to deduct all the money we have put in? we are actually taking a small loss after calculating all our expenses associated with this property.

Thanks for your responses.