Attention Home Owners - Keeping Accurate Records Could Save You Big Dollars When You Sell Your Home

Real Estate Agent with Village Real Estate Services, Inc.

Home Improvement Collage

Chances are that if you've owned your Orange County, California home for ten to fifteen years or more and have never refinanced it, you have accumulated a considerable amount of equity.  Equity is the difference between what you could sell your home for less the amount you owe in mortgage(s).  I've had clients tell me that they really like to make a move, but just don't want to pay the taxes on the sale or have to pay higher property taxes when they move.

What's the answer?  Well there's good news on both accounts.  If you qualify, California Propositions 60 and 90 make allowances for senior (55 and over) who want or need to sell their homes and move into another one. You can actually keep your current tax basis if you qualify...Read all about it in my previous post.

For individuals and married couples who file joint tax returns The Taxpayer's Relief Act of 1997 offers up to a $250,000 exclusion for individuals and up to $500,000 for married couples who file jointly.  One of the things that will help to offset gains over these amounts is keeping accurate records of all capital improvements that will increase your basis.  Take a look at IRS Publication 523 Determining Basis.  The IRS defines improvements as "things that add to the value of your home, prolong its useful life, or adapt it to new uses".

Some of the improvement expenditures you'll want to keep accurate records and receipts for are:

  • Addition(s) - Bedroom(s), Bathroom(s), Deck(s), Garage(s), Porch(es), Patio(s)
  • Heating & Air Conditioning - Heating System(s), Central Air Conditioning, Furnace, Duct Work, Central Humidifier, Filtration System
  • Insulation - Attic, Walls, Floors, Pipes and Duct Work
  • Interior Improvements - Build-in Appliances, Kitchen Modernization, Flooring, Wall-to-Wall Carpeting
  • Lawn & Grounds - Landscaping, Driveway, Walkway, Fence(s), Retaining Wall(s), Sprinkler System(s), Swimming Pool
  • Miscellaneous - Storm Windows/Doors, New Roof, Central Vaccuum, Wiring Upgrades, Satellite Dish, Security System
  • Plumbing - Septic System(s), Water Heater, Soft Water System, Filtration System

Plan to keep all the records associated with expenditures you make on your home.  You'll need this information for your tax preparer for the year you sell your home; the cost basis of your home from your original purchase, the closing statement (also know as the HUD-1 - Your REALTOR® will be happy to furnish you a copy of this), and the records for all your improvement expenditures during the time you've used the property as your principle residence.

The foregoing information is provided to encourage you to begin keeping proper documentation for when you sell your principle residence and is  not to be considered as legal or tax advice.  Please consult your tax professional and for more detailed information.

It's my pleasure to provide my clients with information to assist them in making informed decisions when contemplating buying and selling homes in Orange County, California. If you have questions and would like some honest answers or need more resources, please give me a call, text me or email me.

Marlene Bridges, REALTOR®

800 777-1775 - Toll Free  ~ or ~  Text Me 714 745-2592

Orange County Real Estate Website

Orange County Seniors Lifestyles Blog

 SRES - Seniors Real Estate Specialist®

CRS-Certified Residential Specialist®

President - Laguna Hills/Laguna Woods Chamber of Commerce 2007-2009

President Elect - Southern California Chapter Certified Residential Specialists® 2008 - 2009

Marlene is a highly experienced and respected South Orange County CA REALTOR® specializing in residential Real Estate and the sale of Homes and Condos in South Orange County, California and Saddleback Valley cities of: Laguna Woods, Laguna Hills, Laguna Niguel, Laguna Beach, Rancho Santa Margarita, Lake Forest, Dana Point, San Juan Capistrano, San Clemente, Aliso Viejo, Mission Viejo.


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Ann Heitland
Retired from RE/MAX Peak Properties - Flagstaff, AZ
Retired from Flagstaff Real Estate Sales

I know I've kept all of my records. But where are they?

Mar 30, 2009 05:32 AM #1
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate

Hi Ann - Too funny!  I'll bet you give a home records books to all your buyers.  We often forget to treat ourselves as well as we treat our clients. :)

Mar 30, 2009 05:49 AM #2
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Marlene Bridges

Laguna Homes|Laguna Condos|Laguna Real Estate
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