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Author: bigcaat Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Receipt question Date: 7/3/2006 12:43 AM
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I religiously keep any receipt for anything we do on the house. Some things, the small ones, landscaping things and such, I don't know if they will accept, but I keep everything. We hope to sell within the next 4 years.

We are remodeling our bathroom next week. Today we bought a bathtub/shower door for the remodel. I put the receipt in my pocket, and my husband washed my jeans and washed the receipt with it.

Are we okay since we put it on credit card? Should I print out that credit card statement, notate it and put it with the other receipts, or can we just not claim that when the time comes?

Thanks,
Caat
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Author: cfayed One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87643 of 121061
Subject: Re: Receipt question Date: 7/3/2006 8:46 AM
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I'm really stunned that such a thing can happen - not losing a receipt but your husband washing your jeans!

Seriously, your credit card statement would substantiate the expense assuming that it describes the items purchased rather than just showing a number or department. But since it's a recent purchase you could ask the seller for a duplicate receipt. Some places will do that.

Carole (still shaking my head and vowing to mention this to my husband)

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Author: JeanDavid Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87645 of 121061
Subject: Re: Receipt question Date: 7/3/2006 8:59 AM
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We are remodeling our bathroom next week. Today we bought a bathtub/shower door for the remodel. I put the receipt in my pocket, and my husband washed my jeans and washed the receipt with it.

Are we okay since we put it on credit card? Should I print out that credit card statement, notate it and put it with the other receipts, or can we just not claim that when the time comes?


I am not a tax expert. But I keep receipts for things like new thermopane type windows that replaced the single pane windows and other capital items. I do not keep receipts for things like new flush mechanisms for toilets, washers for faucets, etc. Because some things are considered normal "wear and tear" expendable items that are not really tax deductable anyway.

I do not know if there is a ruling on replacing a shower door or not. If you did not have one and you put one in, perhaps you could deduct this. But merely replacing one? I think not. N.B.: as I said before, I am not a tax expert.

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Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87646 of 121061
Subject: Re: Receipt question Date: 7/3/2006 8:59 AM
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Like the other said, the credit card statement should be enough. Keep in mind only things that ADD to the house can be added to the basis, no regular maintainence. (Adding a new stone walkway can be added, weekly lawnmowing can't) Remember, you will only need receipts should you get audited.

WRJ

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87651 of 121061
Subject: Re: Receipt question Date: 7/3/2006 1:30 PM
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Keeping receipts for improvements is a good idea. At the time of sale, you may need to determine what were repairs and what were improvements. If your selling price is less than $500,000 over your purchase price, it won't matter.

Debra

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Author: JeanDavid Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87652 of 121061
Subject: Re: Receipt question Date: 7/3/2006 2:59 PM
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Keeping receipts for improvements is a good idea. At the time of sale, you may need to determine what were repairs and what were improvements. If your selling price is less than $500,000 over your purchase price, it won't matter.

... it won't matter. For tax purposes. But sometimes the potential new owner would like to know what has been recently replaced. If you replaced a furnace, roof, etc., it will be one less short-term worry for the new owner and he might pay more for your house than one with a 20 year old furnace, hot water heater, roof, etc.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87659 of 121061
Subject: Re: Receipt question Date: 7/3/2006 7:10 PM
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... it won't matter. For tax purposes. But sometimes the potential new owner would like to know what has been recently replaced. If you replaced a furnace, roof, etc., it will be one less short-term worry for the new owner and he might pay more for your house than one with a 20 year old furnace, hot water heater, roof, etc.

and for any warranties. This is a tax board, you can understand that my response was regarding taxes. The loss of a receipt for a shower door is annoying, but not of equal concern as a roof or furnace.

Debra




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Author: bigcaat Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87660 of 121061
Subject: Re: Receipt question Date: 7/3/2006 7:56 PM
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But since it's a recent purchase you could ask the seller for a duplicate receipt. Some places will do that.

It never hurts to ask. Thanks for the suggestion. (Although, it is Home Depot.) ;-)

Caat

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Author: bigcaat Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87661 of 121061
Subject: Re: Receipt question Date: 7/3/2006 7:58 PM
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I am not a tax expert. But I keep receipts for things like new thermopane type windows that replaced the single pane windows and other capital items. I do not keep receipts for things like new flush mechanisms for toilets, washers for faucets, etc. Because some things are considered normal "wear and tear" expendable items that are not really tax deductable anyway.

This is good to know. No, this was an upgrade item. We are remodeling the bathroom and there had never been a shower door here. This is definitely an improvement.

Caat

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Author: bigcaat Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87662 of 121061
Subject: Re: Receipt question Date: 7/3/2006 8:06 PM
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If your selling price is less than $500,000 over your purchase price, it won't matter.

Okay. Got it. So we can only take the home improvement deductions if we make more than a $500,000 profit on the house. This is what I needed to hear. If we sell when we want to, within the next 4 years, barring some kind of boom like we experienced in the past four, it probably won't make a difference, then. If we were to sell now, we'd probably be looking at $315,000 above purchase price.

I'm also glad you mentioned "purchase price." That answers another question I had, unrelated. I've been diligently paying extra, every month, towards principal. I had wondered if the taxable gain was $500k above what was left on the mortgage, or what we paid for the house. "Purchase price" gives us a lot more breathing room.

Thanks,
Caat

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Author: bigcaat Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87663 of 121061
Subject: Re: Receipt question Date: 7/3/2006 8:08 PM
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But sometimes the potential new owner would like to know what has been recently replaced. If you replaced a furnace, roof, etc., it will be one less short-term worry for the new owner and he might pay more for your house than one with a 20 year old furnace, hot water heater, roof, etc.

Understandable. This is a shower door going in with a complete remodel. I have the receipts for everything else, so they can see it being done all at the same time. Not that a shower door is any big deal in worrying about replacement.

Thanks,
Caat

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Author: NaggingFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 87664 of 121061
Subject: Re: Receipt question Date: 7/3/2006 8:13 PM
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I'm also glad you mentioned "purchase price." That answers another question I had, unrelated. I've been diligently paying extra, every month, towards principal. I had wondered if the taxable gain was $500k above what was left on the mortgage, or what we paid for the house. "Purchase price" gives us a lot more breathing room.

To go into a little more detail, your gain on the house is:

The selling price minus the cost basis.

The selling price is pretty straight forward.

The cost basis is your purchase price, plus some costs associated with buying/selling, plus capital improvements, minus a few unlikely situations.

The first $250,000 in gain is tax-free for a individual, the first $500,000 in gain is tax-free for a couple.

I hope that clears things up rather than makes it more complicated.

- Megan


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