Thursday, Apr 19, 2018
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Real Estate

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Let's face it, everyone has his own personal likes and dislikes, especially when it comes to a home. If you're looking to improve your current home or put your personal touch on a house you're buying, there are a few things you should keep in mind.

An improvement is anything that enhances the value of your home, prolongs its life or adapts it to new uses. The money you spend making such permanent improvements (known as capital improvements) to your home can be added to your original cost basis. If some day you sell and profit, they will reduce the capital gains tax you might owe.

TIP: Although recent tax law eliminates almost federal capital gains tax when one's residence is sold, it's still wise to retain all invoices and cancelled checks. There's no telling what changes Congress might make in the law in the years to come.

Among the many "basis-boosting" items that the IRS considers are:

  • Additions

  • Awnings

  • Built-in appliances

  • Ceiling fans

  • Central air conditioning

  • Deck

  • Driveway

  • Fence

  • Finishing a basement

  • Fireplace

  • Water heater

  • Garage door opener

  • Insulation

  • Landscaping

  • New furnace

  • New roof

  • New siding

  • Patio

  • Trees

    In addition, there are certain things you should be aware of with respect to making major improvements to your home:

  • If you put so much money into your home that it's the best on the street, you're unlikely to ever get your entire investment out. Buyers won't pay more than a certain amount for a house on any particular street.
  • Watch out for what appraisers refer to as "functional obsolescence". For example, a new addition can make a house "lopsided" in that it now has five bedrooms and a family room but still only one bath or a tiny kitchen. "Functional obsolescence" detracts from resale value.
  • Additions onto your current home, or other major improvements, involves a large degree of inconvenience and mess. Give some serious consideration to your schedule, tolerance and lifestyle before undertaking any new construction on your present home.
  • Before beginning any new construction, you should carefully research the builder's reputation by interviewing lenders, materials suppliers, subcontractors who have worked with him or her before, and past clients.

    In addition, you should investigate court records and contact the local Better Business Bureau and state contractor's licensing boards to check for any lawsuits or complaints.

    Here's a word to the wise home buyer: If you're buying a new home, looking at existing homes, make sure the dwelling contains space for home office.

    Why do I say that? Because home computer use, and the practice of telecommuting, are becoming more and more popular.

    According to the Bureau of Labor Statistics, spending on computers in the year 2006 should rise to 10 times what the spending levels were 1996. In 1996, Americans spent $61 billion on computers, which works out to $299 per American age 16 or older. By 2006, the BLS expects that nearly $666 billion will be spent on computers - or about $2,953 person age 16 or older.

    At the same time, aging baby boomers say they're planning to stay active, even in retirement. Most surveys indicate that boomers would choose to work at least; part-time, even past age 65. And they're planning to do much of that work from home, via computers.

    What that all means is that home offices will become more and more important to home buyers

    With all the homes being put up for sale during the next several months you'll want to give your home an extra edge to set it apart from the competition.

    One edge could be a letter you write to potential buyers. Include this letter with the packet of information your real estate agent gives to the buyers.

    Write buyers a sort of "love letter" about your home. Tell them what made you fall in love with it in the first place, whether that feature was the burnished hardwood floors, the big bay window that allows sunlight to stream in to the living room, the white tile, cupboard and countertops that make the kitchen appear so clean and inviting, the mosaic tile surrounding the wood-burning fireplace. Here are other tips for putting your home in the best light:

  • Visualize the most scenic route for getting to your house, then tell you real estate agent to always direct buyers along that route. You might even photocopy and highlight a map of that route and hand it to your agent, for use by prospective homebuyers.
  • Also provide your real estate agent with information regarding your home's distance from schools, hospitals, libraries, parks, grocery stores and shopping areas. Homes that are located closer to such amenities sell more quickly.
  • Inspect the house with the eye of someone who's never seen it before. Then make repairs and take other steps to improve its curb appeal. Freshen interior walls with an inexpensive new coat of paint, for example. Set out planter boxes of gaily colored flowers and hang a flag by the front door. You want to make your home as visually appealing as possible, because many buyers find it difficult to see beyond chipped paint and orange shag carpet to a home's possibilities.
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