When you move into your new homes, there are some very basic thing you can do to save you money later. You have to remember that any improvements you make to your home will affect your "basis". Your basis in your home is determined by how you got the home. Your basis is its cost if you bought it or built it. If you got it in some other way (inheritance, gift, etc.), your basis is either its fair market value when you received it or the adjusted basis of the previous owner.
When you later sell your home, the basis is used to determine your capital gains. So the higher you make your basis, the lower will be your gains. Worded another way, the more you put into your home, the more you get out . . . sometimes.
There is another considerationÂ to making improvements. For example, ifÂ you put in a pool, remodel a kitchen, put in a spa etc., these could be considered as part of the purchase price from a tax standpoint, and, therefore, would be seen as taxable gains.
So, what is a homeowner to do? When you move into your home, make a file folder to log all improvements. Put any receipt fromÂ Home Depot or Lowes or licensed contractors into that file. Keep track of changing tax rules governing sales ofÂ real estate. Prior to selling your home, talk to a real estate professional that knows the market. A good real estate professional might make suggestions that will increase the marketability of your home and will add to your basis. And, finally, don't forget to talk to your tax advisor or accountant.
If you need help, please give me a call.