Before the winter falls upon us, some people tend to make last minute home decisions for the fall. Some of these include new roofs, fixing a patio, or just outright remodeling your entire house. These remodeling tasks seem completely separated from taxes, but the opposite is true.
First of all, where the money for the improvements is coming from is important to figure out. Are you going to take out a loan, or are you going to sell stocks. No matter what, an accountant can be a great help in figuring out what capital gains you can make or the repercussions that rise from these situations.
When remodeling your home, you should also track each major improvement. It is recommended to use a spreadsheet to keep track of each paint receipt, the fixtures, and the molding. Otherwise, they could get lost in the clutter of planning and not be found later.
Why is keeping these receipts important? If you set these receipts aside, you could possibly save money for the coming year’s deductions. If the upgrades are energy efficient, you could write off up to 30% for those systems. In addition, if you run a business from your home, you can depreciate the cost over several years. Even if you aren’t part of those two cases, it is still wise to keep all receipts in case a situation that applies to you arises.
Home improvement is much more than hiring workers and buying supplies. It is embedded in the tax world, and it is important to remember that. Where the money comes from and where your receipts and records go are very important aspects to both you and your accountant during tax season.