For tax purposes, a home improvement includes any work done that substantially adds to the value of your home, increases its useful life, or adapts it to new uses. These include room additions, new bathrooms, decks, fencing, landscaping, wiring upgrades, walkways, driveway, kitchen upgrades, plumbing upgrades, and new roofs. I’m in the process of moving house so this caught my eye! I do find that I’m a hoarder and the sentimental things are the most difficult. However, I’ve already taken a pile of books and knick-knacks to the charity shop and I’m in the process of sorting my clothes; slightly more difficult but many went last year so I have to be more brutal this time. I’m guilty of the ‘I might need that one day’ syndrome!
Jane purchased her home for $500,000 and sold it 25 years later for $900,000 During the time she owned her home, she made $50,000 worth of improvements, including a new bathroom and kitchen. These increased her basis to $550,000. She subtracts her $550,000 basis from the $900,000 sales price to determine her gain from the sale-$350,000. Only this amount is subject to tax (if Jane qualifies for the home sale tax exclusion, she … Read moreRead More →