What home improvement-related records should homeowners keep?
1.
With respect to items subject to a warranty, all receipts should be retained during the warranty period. Especially those from “big-box” sellers, who many times will allow you to exceed the warranty period for replacement/repair costs.
2.
Any item that adds value to your home (capital improvements), such as adding a deck or patio, upgraded HVAC systems, hurricane windows, etc. should have permanent documentation retained to calculate a new tax basis (cost for sale) when you sell the home. While you can make a $ 500,000 profit (as joint married owners), you would be surprised how easily in a dynamic real estate market such as South Florida that amount can be exceeded. In addition, better documentation will assist in an insurance claim after a fire or hurricane, setting values to improvements lost.
What’s the difference between a repair and capital improvement?
According to IRS a capital improvement is anything that is done to a property that has a useful life of longer than one year. In practical terms, replacing A/C filters is a repair, and replacing the entire A/C unit is a capital improvement.
Richard Grassano is a Certified Public Accountant and business advisor with
Boca Accounting LLC CPAs
190 NW Spanish River Blvd
Suite 200
Boca Raton, FL 33431
