Tracking/proving capital expenses (home ownership)

[simpsongal]

Does anyone have experience providing proof of capital expenses on a home?

After 12 years in our home, I'm finally putting together a spreadsheet of the home projects we've done, listing the cost, contractors, etc.  I have some of the proposals, estimates, contracts but it's a mix bag of receipts for these things.  The total is over $500K.  And that doesn't include landscaping costs...I know we've spent a lot there but I don't know that I'll bother.

We've done so much to this house over the years, it's probably a minimum of 50 projects and 20+ contractors and some DIY and lots of material purchasing.

Just curious if anyone has been through this?  I wish I knew whether we'd die in this house b/c tracking all this is just....a lot.  If we did move, it wouldn't be for another 15-20 years, so we're looking at 30+ years of receipts. 

[tealblue]

I haven’t, but we bought a huge fixer upper around the same time.

I’ve spent more than 2x the amount we purchased the house for, just on renovations.

I have several binders, grouped for each project. Do I have all the receipts? Probably not.

But I have those plastic sheets in the binder and when we get anything- Lowe’s receipts, contractor receipts, etc, I try and throw them in the right section. Our plan is to live here forever, but you never know.

I have spreadsheets with quick summaries by project and then usually separate spreadsheets for the major projects. If I just go to Lowe’s for mulch, I don’t keep those because I consider that maintenance. I only keep massive projects.

So not helpful but commiseration because I’m in the same boat with tons of money dropped in this house.

[simpsongal]

tealblue, I'll take all the commiseration. I suspect a lot of Boomers w/high appreciation are in the same boat. At a certain point, it probably makes sense to hold a house or consider renting rather than selling before someone passes b/c of capital gains. I wish there were some improvement before/after appraisal process to aid in this - like here's the house at sale, here's what they did and when, and an estimate of what that would cost re capital investment. Done.

Meanwhile, DH has 20+ years of stock receipts piled in various corners of house in case he needs to show his basis in certain stocks. It's not even clear how he could calculate/show it...I just know we need to keep all these random papers just in case (we're not even talking big sums of money). Blargh. I feel 100% certain one of our children will find a giant box of receipts one day and just walk them out to a dumpster.

[Susie]

We don't keep paper, but I scan and save everything.  It's not particularly well organized, but it's all there in one particular folder on my HD + backup, and I could get my hands on it and I could organize it if I had to.  That's where my balance lies for now.  Keep it, but don't sort, organize, or otherwise spend time on it.  I also try to take a lot of photos of projects, which again, aren't really organized, but are there if I need to go back to them.

We're not as far deep as you guys, partly since we've only been in this house for 3 years.  We've put over $100k in since buying it, just on new windows, new doors, adding a generator, grading/water management in the backyard, and new hardwood floors.  There's tons of smaller stuff too, and lots still to go.  This summer is a new shed, fence, and hardscaping.  Oof.

[k3am]

simpsongal , as far as the boomer scenario goes.. We just sold my mom's house. She bought it in the early 70's for $77k, and we sold it for significnatly more. She gets a $250k capital gains exemption.

She did a fair amount of work on it over the years, all meticulously documented until about 2007 when she had some health issues, which wasn't improved by dementia. We KNOW she renovated the kitchen 3x, but she only has records for 1. Bathroom renovations, solar, new windows, new roof? Not a single record. Our CPA has advised that while he can't guarantee it, he's never had the IRS question capital improvements as long as the amounts were reasonable.

When we sold our prior house, we didn't need to show any documentation of improvements. We had done almost exactly the amount needed to offset capital gains.

We've put about ton into this house and are in the beginning phases of throwing a LOT more at it. I've got a spreadsheet that lists the year, item, vendor, and amount. I imagine that I can pull up cancelled check or ACH information digitally, and have email documentation for most things.

[k3am]

mofongo, I don't know about OP's exact reasoning, but in our case, to document the offset to capital gains tax when we get to a point of selling.

[fortnightlily]

May 17, 2024 10:58:22 GMT -5 mofongo said:

So, silly question, why would you need to keep receipts?? 😬

This is a good overview: turbotax.intuit.com/tax-tips/home-ownership/home-improvements-and-your-taxes/L6IwHGrx6

Notable:

Under current law, if you have owned and lived in the home for at least two of the five years leading up to the sale,

The first $250,000 of profit on the sale of a principal residence is tax-free for single filers.
The first $500,000 of profit is tax-free for married couples who file joint returns

So you only need receipts if you intend to try to offset profits above those amounts on a home sale from what you spent on improvements. 

[simpsongal]

k3am, that's really helpful, thank you for sharing. And I'm sorry about your mom.

[lolalolalola]

It’s wild to me that you have to pay capital gains on a home you lived in for decades! 

[ellipses84]

I recommend scanning receipts from places like Lowes that use the thin heat printer paper rolls because the text can fade or disappear after a few months.

[Pom]

So this was me last year. I bought a house in 1991 long before I was ever married. I lived there for 15 years, married H moved in with him briefly and then we relocated to TX for 18 years, keeping the original house. We and parents used it, as a summer home. We had multiple homes in Texas cities, moving around due to jobs/moving up in career and managed to live in all 3 long enough to avoid capital gains. Last company H worked for merged again, and we moved back to Michigan and original home I had. So, we lived there for a year+ as we searched for a larger house, stuff in storage. Found new house, moved in and now it was time to sell original house. I had a folder with all paperwork over the years that I retained (thank goodness). I had a most all of the capital expenditures accounted for at tax time, because we were not able to use the 2 year primary home exclusion when we moved the last time. This is definitely paperwork you want to save in this type of scenario or if you have massive gains on the value of your home. My capital gain on the house was over $100k, but had we lived there another full year, we wouldn’t have had mattered due to the 2 year exclusion.

[gt7301b]

I only have proposals/contracts for large projects ~ over $2K.  I keep all of the proposals/contracts in a google drive file.  Given how much homes have appreciated I do think we will need these when we sell but I don't think it will be worth worrying about the smaller improvements.  We aren't big DIYers and most of the things we do are smaller in scale and I would classify them more as repairs/maintenance than a capital improvement so I don't worry about them.