Today, Amy Walls of Thimbleberry Financial sits down with Jag to talk about tracking basis on your residence, and why it's important. Simply put, the basis is what you paid for a property. More complex, you'll want to track changes, such as improvements and depreciations. This will have a tax impact when the property sells.
As a property owner, you have an exemption on the gain in basis between your purchase and your sale of a property. That's $250,000 for single and $500,000 for joint. Here's an example for a single person. If you bought a home for $344,000 but sold i for $565,000, that's a gain of $221,000. That's within the $250k limit- no tax implications.
This math can be complicated by other scenarios, including:
Amy and Jag cover what the IRS defines as capital improvements to a home (that would change the basis) and dive into another specific example.
For a married couple, a home is purchased by a married couple for $650,000 and sold for $1,300,000.
It's important to track any and all capital improvements to your home. And track them with your taxes every year, so you're not scrambling to find years - or decades - worth of records when you're ready to sell your property.
For questions about anything related to your financial future, reach Amy Walls and her team at Thimbleberry Financial at (503) 610-6510, or on the web at https://thimbleberryfinancial.com/