Keep Those Receipts

Physician's Money Digest, April15 2005, Volume 12, Issue 7

When the tax law boosted the capitalgains exclusion on the sale of homes($500,000 for married couples;$250,000 for individuals), many homeowners thought they could get rid of allthose receipts for capital improvementsthey've had on file for years. Not sofast. The exemption doesn't apply torental properties or vacation/secondhomes, so you'll still need receipts forcapital expenditures on these properties.Also, if inflation pushes the capitalgain on your primary residence abovethe limit, which is very common intoday's booming real estate market,proof of capital improvements thatincrease your cost basis in the house canbail you out.