What To Do if Your Home is Broken Into

What To Do if Your Home is Broken Into

While we hope it never happens, break-ins to our homes do occur. I returned home this summer to find my home was burglarized. This article shares what we learned from this unfortunate experience and ways to improve your home security and insurance coverage.

If you return home and see evidence of a break-in:

1. Contact the police! They’ll ask if the burglar is still in your home. If you’re not sure whether the thieves have left your property, wait until the police arrive to enter your home. Our first instinct is to rush into the home to check on things, but remember that it’s much more difficult to recover from physical harm than from the loss of belongings and property damage. Note: If you do walk through your home to see what’s been stolen or damaged before the police arrive, don’t move anything because the police need to see all the evidence. (more…)

Why It’s Important to Keep Track of Improvements to Your House

Whether you live in a popular residential market like Seattle, San Francisco or New York, or have simply lived in the same home for several decades, it’s more common than ever that households are incurring taxable gains when they sell their home.

Taxable gains from the sale of a primary residence occur when the gain from the sale is above the $250,000 gain exclusion for an individual and $500,000 for a couple. This gain exclusion is available to households that meet the following criteria:

  • You’ve used the home as your primary residence for two out of the past five years (use test).
  • You’ve owned the home for two out of the past five years (ownership test).
  • You did not use the home sale exclusion in the past two years.

The gain is calculated by subtracting selling expenses and your adjusted cost basis in the property from the sale price. The adjusted basis is what you previously paid for the home plus the cost of improvements. Since you are subject to federal capital gains taxes, state taxes (where applicable) and the 3.8% Medicare surtax (in many cases as the taxable gain can be sizeable), keeping track of your improvement history can lead to significant savings on your taxes.

What’s considered an improvement?

The IRS provides the following examples of common improvements to your home that will increase your basis. (more…)