Home Improvement: The Garage

The garage might not immediately come to mind when thinking of home improvements but there are plenty of things yo can do that might not add great value to your home but will certainly make your life a bit easier.

  • Organize, organize, organize: Making effective use of your space, whether it’s tools, laundry or storage, is vital.
  • Improving insulation & wall paint: Poor temperature control can damage your garage’s contents. A new coat of paint will certainly make it look better.
  • Convert to extra living space: This, of course, finding alternative sources of storage, not to mention where to park your car.
  • Adding features: Carport, custom caravan shed, charging station?
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Home Value Increasing? Beware Taxes!

If you already own a home, the recent real estate boom – especially in the Bay Area – is a good thing. Isn’t it?

Well, yes – that is, until you decide to sell.

A recent article in the New York Times points out that single single homeowners with gains of over $250,000 and married couples who have gained at least $500,000 could end up paying federal tax of as much as 23.8 percent on these real estate gains over those amounts when they sell. This, in addition to possible state taxes.

Of course, this is more of a problem in expensive cities such as San Francisco where 25 percent of all homes will be affected. In San Jose, the percentage is closer to one-third.

Fortunately, there is the possibility of some relief in that you may be able to deduct the cost of home improvements from your gain when you sell. Internal Revenue Service Publication 523: Selling Your Home provides the I.R.S.-approved list of things that you can subtract from your gain before you determine whether it’s below or above the $250,000/$500,000 limit.

A few caveats: Repairs are not included. Painting and re-finishing floors count as repairs; installing a new hardwood floor does not.

Also, you must keep receipts for all the home improvements.

Finally, the laws could change or at least the $250,000 and $500,000 figures.

In the meantime – save those receipts.

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Adding Value to Your Home

Certainly one way to add value to your home is through home improvement. But experts agree: not all home improvement is created equal. For example, kitchens and bathrooms traditionally have the best return on investment, often in the neighborhood of 85 percent. On the other hand, unless your block is stocked with home with pools, it might not be a wise idea to add one, as the return on investment is likely to be under 50 percent. And don’t be so qucik to add that home office or sunroom as these specialty items might not fit the needs of your prospective buyer.

Home improvement is never a bad idea; just be selective in your projects and it will become a great idea!

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