This is one of those little things that no one ever TELLS you to do, but could save you THOUSANDS when it comes time to sell a home. My process is really easy. Whenever I have make a “capital improvement” to my home, I just add it to the spreadsheet and scan the receipt into Google Drive. It takes about a 1 minute.

Not EVERY piece of maintenance you do on your home counts as a “capital improvement” though. A capital improvement has to add value, prolong the useful life, or adapt the home to new uses. Things like remodels, adding a deck, new roof, new HVAC, new fencing, etc would count. Routine maintenance doesn’t count. This would exclude things like painting, fixing leaks, patching drywall, pest control, etc. If you’re not sure, I say add it to the list, put a note in your spreadsheet and let your tax preparer figure it out!

Another BIG thing that can reduce taxes on your sale is any transaction costs. Things like title fees, transfer taxes, realtor fees, escrow fees, etc. Those can easily add up to the tens of thousands of dollars that shouldn’t count toward your gain on the house!

When I filed my taxes, I sent this spreadsheet over to my tax preparer and it quietly lowered my tax bill by over $59,000! Had I not sent that, he probably wouldn’t have asked and I’d be $59K poorer. The more you know!

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy