Tax Relief 101: Real Estate Deductions
Your home is your best tax shelter and this week’s “5 Tips” by Gerri Willis is focused on finding all those deductions you can use. The tips are pretty much common sense except for #2, which I didn’t know before reading. You should save all the receipts from home improvements and repairs because they can be deducted when you sell the home. So if you replaced your siding and it cost $2,000 then that’s $2,000 you can deduct from the profit of the sale, thus reducing your capital gains tax.
via CNN Money.
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4 Comments - Share Your Thoughts
Would fencing your backyard fall under #2?
Really? I had never heard that either. Guess it isn’t advertised very well. I will have to keep that in mind for my new house. It kind of stinks that I just sold my old house last year…probably missed out on some deductions.
After thinking about it some more, it seems like this may only be useful if you sell your house for more profit than you are allowed to take tax free. Since I am married, I would have to sell my house for a $500,000 profit. This part is tax free…then I could deduct the cost of repairs and improvements from my profit to try to get it under $500,000 so I don’t pay taxes? Anyone know if that is correct? Does it work like that or could I actually deduct those expenses from my regular taxes and perhaps offset some stock gains or something?
RS, you are correct. Normal people usually cannot expect true tax savings down the road.
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