Tracking Home Improvements

Since most people know that up to $250K ($500K if married filing jointly) in primary residence home gains are excluded from taxable income they don't tend to keep receipts for the dollars they spend on capital improvements (i.e. redoing a bathroom, etc). They figure that in the current market conditions there is no way that they will ever have to worry about those gains. While that may be true, there is another reason to track them that people are now missing out on. As many people are finding in the current environment, it is tough to sell your home for a decent price. As a result, some people are deciding that renting their property is the way to go. When you have a rental property you recapture the cost of the building over time. This recapture can include the cost of improvements (which are different from repairs). However, if you don't know the dollar figure you obviously can not recapture those expenses and miss out. The long story short if track all your improvement expenditures on your home. You never know when you may need them for your CPA to prepare a rental property tax return.