Requesting Feedback on Strategy to Track Home Account by Basis for Tax Reasons

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Real Estate Values

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jconne

I'd appreciate feedback on this strategy.

I have a home account that I want to use to track by basis for tax reasons when house is sold. The first transactions in this register show my costs including purchase related fees. Then I show the mortgage and at a later date I show a home equity loan for a major home improvement project.

Over the years I have entries for major home improvement projects that have project-specific tags to make it easy to track transactions for each of them. The transactions in other registers are categorized As HOME:Major Improvement Projects. I also have other HOME sub-categories for continuing improvements and maintenance investments.

My plan is to have a manual entry in the home basis account for:
- each year's principle payments on the mortgage
- each year's principle payments on the home equity loan (HEL)
- each major improvement projeect
- each year's other basis investments - I need to be more clear on what specifically is appropriate to include. I can report that by having distinctive sub-categories for what is appropriate. I know materials and labor are appropriate. But how about preventative maintenance and supplies?

I'm interested in any knowledgeable advice.

Thanks,

Jay+

Rocket J Squirrel

Your strategy seems fine. So the gist of your question is what improvements contribute to basis?

I suggest you read the "Adjusted Basis" section of IRS Pub 530:

https://www.irs.gov/publications/p530#en_US_2021_publink100011949

If I missed the point of your question, just leave a further comment.