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Confused on Selling |
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Dear Edith,
We bought our house in 1964 for $28,000. We think it will sell for around $110,000 today.
In the process of organizing our papers I came across two folders of capital improvements and I remember being told to keep these. It had something to do with selling the house, but I am vague on it.
Do we need to keep them? I do know that in those days we didn’t pay tax on them. I’ve noticed that anything done to the house is now taxed. I also know capital improvements do not apply to repairs. But I remain confused. Any information would be appreciated. – C. C. B.
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You more than meet the requirements for a tax-free sale of your home, and when you sell, you can sign a statement that no tax is due. Your sale won’t even be reported to the IRS. You’ve owned and occupied the house the required length of time, and your profit is more than covered by the federal and state homeseller exclusions, $500,000. The records of capital improvements would be useful if you ever needed to calculate your total cost basis, but that won’t be necessary. Those taxes you refer to were probably sales tax and have nothing to do with capital gains anyhow. |
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Edith
Originally published on April 1, 2007 |
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