Today, Amy Walls of Thimbleberry Financial sits down with Jag to talk about tracking basis on your residence, and why it's important.   Simply put, the basis is what you paid for a property.  More complex, you'll want to track changes, such as improvements and depreciations.  This will have a tax impact when the property sells.As a property owner, you have an exemption on the gain in basis between your purchase and your sale of a property.  That's $250,000 for single and $500,000 for joint.  Here's an example for a single person.  If you bought a home for $344,000 but sold i for $565,000, that's a gain of $221,000.  That's within the $250k limit- no tax implications.This math can be complicated by other scenarios, including:Staying in your home longer than expectedDIY improvements vs. using a contractor vs. somewhere in betweenPassing of a spouse (you have two years from date of death to use the joint $500k exemption)Amy and Jag cover what the IRS defines as capital improvements to a home (that would change the basis) and dive into another specific example.For a married couple, a home is purchased by a married couple for $650,000 and sold for $1,300,000.Without tracking the change in basis, that's a gain of $650,000, over the limit of $500k. The remaining $150k would be subject to capital gains taxes.If they did $220,000 of improvements to the house, the original $650k basis is now $870k.  The $1.3 million sale price is only $430k in gains, within the exemption, no capital gains taxes due.It's important to track any and all capital improvements to your home.  And track them with your taxes every year, so you're not scrambling to find  years - or decades - worth of records when you're ready to sell your property.  For questions about  anything related to your financial future, reach Amy Walls and her team at Thimbleberry Financial at (503) 610-6510, or on the web at https://thimbleberryfinancial.com/
To get in touch with Amy and her team at Thimbleberry Financial, call 503-610-6510 or visit thimbleberryfinancial.com.

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