you go to sell your home someday, the IRS allows you to deduct home
improvement costs from your profits before paying taxes on them.
To take advantage of this, it is in your interest to track the amount
that you spend on improvements. IRS home sale tax rules also enable
qualifying taxpayers to exclude from federal taxation a large chunk
of profit -- up to $250,000 for single taxpayers, $500,000 for married
couples filing jointly.
tax purposes, at the time of sale the IRS enables you to deduct
the cost of improvements but not money spent on maintenance. What's
the difference? Well there is a difference but, as with all matters
on which the IRS has an opinion, that difference isn't always crystal
improvements are things that you do to your home that permanently
increase its value and lengthen its life. Capital improvements
include such things as landscaping your yard, adding a deck, purchasing
new appliances (as long as you leave them when you sell), installing
a new heating system or roof, remodeling and adding rooms, and
and repair expenses, in contrast, include those types of fix-up
items that need to be done throughout your home from time to time.
Maintenance and repairs include such things as fixing a leaky
pipe or toilet, painting, paying someone to cut your lawn and
pull weeds, and the like.
So, when you buy a home, keep handy a file folder into which you
can dump receipts for your home improvement expenditures. If you're
in doubt as to whether an expense is an improvement or a maintenance
item, keep the receipt and figure it out when the time comes to
sell your home.
Next Step: Maintenance and Other Costs
To Buyer Services