Buying or Selling a Home/selling house in california
I recently remodeled a home I own because I plan on selling it. I have had the house for over 15 years now and I never lived in it. I have kept all the receipts for the home remodeling and the new appliances. I have a potential buyer who wants to buy the house with no brokers to save money. My question is what is the best way to avoid taxes on selling the home and does keeping receipts help to get a return in taxes.
I am first qualifying my answer by informing you that I am not an accountant or CPA and cannot give accounting advice. You should check with an accountant or CPA for accurate, up-to-date information. I am, however, giving you the benefit of my understanding of how your situation might work, subject to verification by an expert in the accounting field.
If the house you are selling is a second home, my understanding is that you cannot deduct any losses you might incur.
If the house is rental property, in addition to deducting your increased basis from your original sales price, you would be able to deduct a loss on the sale.
Yes, keeping good records and receipts helps to document any deductions on your return. It’s my understanding that the IRS only allows capital expenditures (those with a life expectancy of one year or more such as kitchen stove, HVAC system, new roof, new windows, hot water heater, etc.) to be added to your original basis.
There are also certain fix-up expenses you can deduct when you sell.
You can go to http://www.irs.gov/uac/Forms,-Publications,-and-Other-Tax-Products
and download Publication 523 which should answer most of your questions. If you need more help, consult with a good accountant or CPA.
Good luck to you.