Taxing times for homeowners

Posted by on December 21st, 2017

 

It’s that time of year again. Thick in the heart of the Holidays with the property taxes already paid, most of us are thoroughly spent…both physically and financially.

businessman's hand & steel grocery cart full of money stacks - i

Of course, it also means January, and the New Year, are right around the corner.

It’s time to start thinking about paying federal taxes. With big changes for homeowners looming, why not consider hiring a professional to prepare your return?

For some, the thought of spending money to do something they COULD do themselves is particularly painful.

That’s why so many struggle to keep up on housework instead of hiring a maid, or try to maintain a sprawling yard and garden instead of hiring a landscaper.

Many may manage to keep spotless houses and beautiful lawns. But taxes are not sweeping and mowing.

Home ownership significantly changes most people’s deductions and other tax situations. Hiring an accountant to help complete the return correctly and maximize refunds is a good idea.

Getting taxes done professionally just once can be a personal template for future years.

At the very least – save all receipts. Home sellers can make up to $250,000 in profit without paying capital gains taxes, as long as it was their primary residence for at least two of the past five years.

If it was purchased for $150,000, and it sold for $450,000, the basis in the home, or the amount originally paid, is $150,000. Minus the $250,000 exemption, there’s still $50,000 in taxable income.

But with receipts for home improvements – say a $20,000 kitchen remodel – the basis is $170,000, and the seller only pays taxes on $30,000. That’s a huge savings.

Carefully tracking and filing home expenditures can seem taxing, but you’ll thank yourself in the long run.