Past Home Improvements

[legomom922]

Tom, I was reading in one of your books about the deprciation and it said somewhere to write down and keep track of past improvements. Maybe I missed something somewhere, but if I did lots of home improvements before I went into business, why would I keep track of them now? Can I still claim them?

I started my business in 2010. However in 2009, we had all new windows & doors put in plus had the attic insulated, repaired the roof, new soffets, new gutters, new deck etc.

We also had our bathroom remodeled in 2010, and added a window in there, but it's not regularly used for DC.

Outside, we had a dump truck of dirt delivered to level out part of yard for our pool. Is that a home improvement? Or just a household expense? It was about $150.

Also, we added a hose faucet to teh back of the house so there was lots of plumping to install. Is that a home improvement or repair?

[TomCopeland]

Home improvements

The reason you want to track any home improvements you did before your business began is because they are added to the purchase price of your home, making the basis of your home higher for depreciation purposes. I.E. You'll get a higher home depreciation deduction.

Everything you describe is a home improvement except the dirt which is a land improvement (add it to the cost of the pool and depreciate it as part of the pool).

[legomom922]

Thanks Tom. Can I write off the time that we worked on home improvement projects even though the home improvements projects were not all 100 % for DC? The pool/dirt project and the plumbing to add to add a hose project were somewhat DC related since they used the pool and the hose in the backyard.

I think our home is assessed for 123,000, and teh town has no knowledge of what we have done to increase teh homes value, so when I consider the home improvements, do I add exactly what we spent to the above figure?

[TomCopeland]

Home improvements

Don't count your time putting in the home improvements. You should only count time if you wouldn't do it except for your business.

You base your home depreciation on the lower of these two numbers: the purchase price of your home, plus improvements or the assessed value of your home plus improvements.

[legomom922]

Don't count your time putting in the home improvements. You should only count time if you wouldn't do it except for your business.

You base your home depreciation on the lower of these two numbers: the purchase price of your home, plus improvements or the assessed value of your home plus improvements.

Ok now I'm more confused..Heres my situation: My husband bought this house with his 1st wife. It was a HUD house at the time, and was a wreck. He bought for $75000. When they divorced, he had to refi and added a credit card to pay off, so then refi 90,000. We have done alot of work to this home and probably put in $10,000, however he also had put another $5000 before me and no longer has any of those reciepts. Now its asessed at 123,000, and we had a realtor here a couple of months back and he said we probably could get $129,000 for it. So when I depreciate it, which number am I using? The original 76,000 plus the $15,000 instead of the 123,000 plus 10,000? Thats seems like I am not getting enough benefit then..

[TomCopeland]

Home depreciation

I don't understand what you meant by refinancing and the credit card.
Otherwise take $75,000 + home improvements before business began ($15,000) = $90,000. Since this is less than the current value of the home, use $90,000 for depreciation.

[legomom922]

I don't understand what you meant by refinancing and the credit card.
Otherwise take $75,000 + home improvements before business began ($15,000) = $90,000. Since this is less than the current value of the home, use $90,000 for depreciation.

I'm sorry, I am a insomniac, for real and cant think straight most of the time..

I order for my husband to get the exwife off the mortgage, he had to refinance the house in his name and when he did that, he took out a larger mortgage to pay off one CC, so thats why I didnt know what amount to use. The original price or the refi price. From the sounds of it, I use the original purchase price no matter what?

[TomCopeland]

Home Improvements

Yes, in your case use the original price plus home improvements made before the business began.