Tax deductions for home improvement
Tanker
replace carpet,sprinkler system. Do these things count as a deduction on
taxes and how do they figure in Thanks
Three3Star
upkeep costs) can be deducted from the selling price of your house and thereby
reduce the amount of capital gains you would pay on the transaction.
ma...@maybe.com
is not taxed at all... where have you been? This was changed in 1997
Marilyn and Bob
law might change again; 2) There is a threshold amount; and 3) You need to
know the full basis of the house for depreciation purposes in case you
decide to rent out all or part of it, or use part of it as your primary
place of business. There are other, less likely scenarios that would
require the knowledge of the amounts of these improvements. Note that
repairs, no matter how expensive, like the replacement of the roof in kind
is generally not considered a capital improvement.
--
BobJ
<ma...@maybe.com> wrote in message
news:39f0817d...@news.speakeasy.org...
Steve Scandore
repairs and then only the interest and points are a deduction..
Steve
William Hughey
Home improvement costs cannot be used sd an income-tax deduction. As one
other respondent pointed out, capital gains are not taxed on homes under most
conditions. However, there are some conditions where they will be taxed. In
the future, if you decide to sell, do some tax research on this issue before
preceeding. And of course, every few years Congress changes the tax laws so
anything you read here may be different by the time you sell.
Craig
John Barry
news:8spsne$b8o$1...@slb7.atl.mindspring.net...
> I am doing some home improvements kitchen counter tops, wood floor to
> replace carpet,sprinkler system. Do these things count as a deduction on
> taxes and how do they figure in Thanks
Hi, Tanker.
Home improvements (vice repair/maintenance) qualify as "adjustments to cost
basis." IOW, if you boutght a $100K house, after spending $5K finding it,
then spent $50K closing in a room and adding a pool, your adjusted cost
would be $100K + $5K + $50K. So the only possible taxable gains would be
what you receive beyond that.
Don't count on avoiding such taxes, but don't structure your plans on
ducking them either.
Regards,
John
Dave G
>replace carpet,sprinkler system. Do these things count as a deduction on
>taxes and how do they figure in
The upgrades themselves are not tax deductible. If you finance them with a
home improvement loan, the interest may be dedctible.
Dave
Ed
>
> Capital Gains on the sale of a primary residence lived in for 2 years
> is not taxed at all... where have you been? This was changed in 1997
>
> On 20 Oct 2000 17:03:55 GMT, three...@aol.com (Three3Star) wrote:
>
> >My understanding has always been that any improvement costs (as opposed to just
> >upkeep costs) can be deducted from the selling price of your house and thereby
> >reduce the amount of capital gains you would pay on the transaction.
Gains up to $500,000 for married filing jointly and $250,000 for filing
single are excluded. Above that, it's taxable.
Ed
Dan Musicant
:My understanding has always been that any improvement costs (as opposed to just
:upkeep costs) can be deducted from the selling price of your house and thereby
:reduce the amount of capital gains you would pay on the transaction.
Yes, this is fascinating and as stated above is how I understand it.
However, it is not clear to me. I saw something like this in "Homebuying
for Dummies", and so I qualify as an edified dummy. As such, I don't
know much... or enough, that is. I was not aware of a 1997 change in the
law (and the book didn't inform me of one) that exempts you from capital
gains exposure from sales of a house you live in at least 2 years. As
people are saying, the laws can always change.
I bought my house in March and have just tons of things to do and have
been keeping my receipts. However, it is not at all clear to me based on
the above what would qualify as an improvement and what would qualify as
upkeep. Some things (many things) seem to fall in a gray area, in my
opinion. For instance, the house when I bought it needed an awful lot of
work (and still does), and that's why I got such a good price on it. So,
if I do something like paint the garage, does that qualify as upkeep or
improvement. Obviously, given the circumstances you can see why I feel
it's an improvement. However, someone else might say that it's the kind
of thing that has to be done periodically and therefore falls in the
category of upkeep. But under the circumstances I feel it should be
regarded as improvement since it was needed when my escrow closed and
wasn't something that came along in the normal progress of things. There
are a great many of such things involved with my house. It needs
foundation work, a new roofs, paint inside and out and many other
repairs that could be construed under some circumstances to be upkeep
but I feel should be regarded as improvements IN MY SITUATION. Can
anyone shed some light on this? Thanks.
PS I'm considering calling the IRS and sounding them out about their
policies/laws, etc.
Dan
William Brown
you are still responsible for your return.
I think anyone would be prudent to keep track of costs of owning and
improving their home. Laws change, and a home today that would fall in
the exclusion may appreciate to the point where there is a tax
liability. The altenative minimum tax, for example, was't supposed to
hit the middle class, but it is hitting us now.
Technically, and I work here from memory, there are two types of
expenses you need to keep track of. The cost of acquisition is usually
your basis for tax purposes. Your basis is increased by improvements
you make. Maintenance items, such as painting, almost certainly would
not qualify as improvements; residing almost certainly would.
Landscaping probably qualifies; lawn care probably doesn't. A new roof
probably would qualify; repairs to the roof probably would not. Putting
on awnings or new windows would probably qualify; repairing the old
windows probably would not.
A separate category are fix-up costs incidental to sale of the property,
and these can include what are normally maintenance costs. When last I
looked, they had to be incurred within a certain time limit from the
date you sell. If, for instance, your realtor tells you (written advice
would be nice)that repainting your home will really improve the market
price, you could probably deduct the cost of the painting as a sales
expense, just as you could deduct the realtor's commission.
--
SPAMBLOCK NOTICE! To reply to me, delete the h from apkh.net.
Marilyn and Bob
if you are living in a construction zone) are considered capital
improvements. This includes painting, roof repairs, etc. After moving in,
replacement in kind, no matter how expensive, is generally considered a
repair (not capital). But replacement by something better is generally
considered a capital improvement.
If you own rental property (like a two family house where you rent one
apartment), you prefer the repair to the capital improvement (for the rental
part). The repair can be deducted against current income; the capital
improvement has to be depreciated over many years.
--
BobJ
"William Brown" <wbr...@apk.net> wrote in message
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Jeff Cochran
>if you are living in a construction zone) are considered capital
>improvements. This includes painting, roof repairs, etc. After moving in,
>replacement in kind, no matter how expensive, is generally considered a
>repair (not capital). But replacement by something better is generally
>considered a capital improvement.
The general rule is that anything that extends the life of a property
"significantly" is a capital improvement. The significant part is the
hard to judge part. For example, a new roof is often a capital
improvement, even if the same materials as the old are used, because
the life of the property is extended for another 25 years or so.
The best advice is hang onto all receipts for repairs or upgrades to
your home. Tax laws always change and you never know when it may come
in handy. At worst, you can show the reciepts to the next purchaser
to prove you actually put on a new roof three years ago when the home
inspector says "that roof looks at least twenty years old..." :)
Jeff