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Architecture Guide
Cost vs. Value Report
Good Neighbor Awards
Handouts for Customers
Top 100 Companies
Take a Quiz
30 under 30
Young Professionals
REALTOR® Emeritus |
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SALES MEETING TOOL KIT: REAL ESTATE TAXES 101 |
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 Real Estate Taxes 101, Introduction Component 1: Facilitator Talking Points Component 2: Real Estate Taxes 101 Meeting Agenda Component 3: Activity 1, Common Real Estate Tax Mistakes Quiz Component 4: Answer Sheet for Activity 1, Real Estate Tax Mistakes Component 5: Handout 1, What Can You Deduct When You Own a Home? Component 6: Activity 2, What Tax Deductions Mean to the Homeowner Component 7: Handout 2, What’s Your Real Gain? Component 8: Handout 3, A Basis Worksheet Component 9: Handout 4, Improvement vs. Repair Component 10: Activity 3, Name That Tax, or How Fast Can You Calculate Component 11: Answers for Activity 3, Name That Tax, or How Fast Can You Calculate Component 12: Other Resources |
Component 8 Handout 3: A Basis Worksheet To calculate capital gains, you must know the total cost or adjusted cost basis of your home. The cost basis is: · the amount you paid for the home · the cost of the land and the cost of building your home · the amount you paid for your cooperative share, if your home is a coop · the fair market value of the home as of the date you inherited it Your basis can also be increased or decreased by any allowable “adjustment to the basis” that you have made. The higher the basis is the lower the gain will be, and therefore, the lower the potential tax liability. Common adjustments that increase your basis: 1. Capital improvements are any expenditure that · materially adds value · will last more than 12 months · creates a new use Capital improvements include items such as a renovation of all or part of the house; adding new rooms; adding new roof, a fence, or a pool; paving your driveway; or putting in new plumbing, wiring, or appliances. (Note that if you do any work yourself, the cost of your labor can't be added to the basis.) Keep in mind that the costs of repairs—including painting inside or out, fixing gutters or leaks, replastering, and replacing a broken window—are not considered capital improvements unless they are done as part of a major renovation. Common adjustments that reduce your basis: 1. Energy conservation subsidies received from a utility 2. Depreciation you deduct from your income taxes on the portion of your home you use as a home office In addition, certain costs associated with the buy-sell transaction may be added to the basis. For the buyers, these include: 1. Recording fees 2. Buyers’ attorney fees associated with the closing 3. Inspection fees, if the buyers pay them For the sellers, these include: 1. Transfer taxes and stamp fees 2. Sellers’ attorney fees associated with the transaction 3. Real estate commission Component 9: Improvement vs. Repair > |