Minimizing Gain on Home through Basis Adjustment

The front of a homeWhen a taxpayer sells a house, they have the opportunity to take a capital gain exclusion up to a certain amount of the gain from selling the house. In the situation where the gain actually exceeds the exclusion amount, the taxpayer can add home improvements and expenditures to the basis to try to minimize the gain.

It is extremely important that you keep all your documents that involve buying and improving a home. If in the future you decide to sell the home, those documents will come in handy if you need to adjust the basis for tax purposes. Make copies of all your documents and save them somewhere they will not get lost over the years.

Factors Affecting Home Basis

Below we will list all the factors that a homeowner could use to adjust their basis when it comes time to sell their home. These are just the basics and there could be many more depending on your situation. A lot of time, a homeowner will experience more than one of these factors and together they can drastically alter the basis of a property.

Home Improvements

1. New roof
2. Additions
3. Fences
4. Gates
5. Swimming pool
6. Septic tank update
7. Bathroom remodel
8. Trees and other plants
9. Central air addition
10. Conversion of rooms
11. Insulations
12. Driveways
13. Walkways
14. All type of fixture updates
15. New gutters

Acquisition Costs

1. Survey
2. Closing costs
3. Mortgage tax
4. Title search
5. Insurance
6. Legal fees
7. Appraisal fees
8. Broker commission

As you can see this is a very long list and can be made longer depending on your situation. Each of these factors will create a large amount of paperwork that needs to be stored by the homeowner until it is time to sell the property. Make sure you do not lose the documentation so when it comes time to sell your property, you will be prepared.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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