Tax Breaks on Capital Improvements
When You Sell Your Home
Obviously, finishing your basement or gutting and updating your kitchen will increase the value of your home. What you may not know is that the money you spend on this type of improvement could also help lower the tax bill when you sell it.
The following tips will give you a thumb nail sketch of this topic.( For more information- go to Page 9 of IRS publication 523, which has a list of eligible improvements.)
- Capital Improvement expenses need to be documented with receipts.
- Rule of thumb: Capital improvement increases your homes value/repair returns something to it’s original condition.
- Replacing a few shingles is not a capital improvement, putting on a whole new roof is.
- The improvements must still be evident when you sell-if you put a new roof on 20 years ago it won’t count.
- The IRS says that Capital Improvements must last more than one year, prolong your homes life, add value to your home or adapt your home to new uses.
For more information visit www.houselogic.com or contact a Tax professional in your area.