Keep Those Home Improvement Receipts!

There has been some bad advice going around out there that you don't need to keep your receipts for home improvements.  True you do not have to have them for tax purposes -

But keeping them may be to your advantage.  The current exclusion from Federal income tax for a gain on the sale of a home is $250,000 if you are single, and $500,000 if are married and filing a joint return.

For instance, suppose you paid $88,500 for a little 2 bedroom home in West Linn on a 100' x 100' lot in the early 90's.   In todays market that home may well sell for $350,000, or a gain of  $261,500.  For example purposes, we will ignore selling costs - so if you are single, after deducting the $250,000 exclusion you have a taxable gain of $11,500.

On the other hand, if you had home improvement receipts for $11,500 or more you would have no taxable gain.    

You might say, I am never going to live in a house long enough to realize that much appreciation - and you may be right.  But is does not cost much to have an envelop in your home office center to keep those home improvement receipts.  Hang on to them until you sell the property - they may just save you some tax money.  

Since I gave up my tax preparer's license some years ago, of course,  I always recommend that you check  with your tax preparer.