Categorizing home repair/improvement expenses


H

H Gohel

Trying to figure out how to record & categorize expenses that go towards
repairs and improvements of my home. Looking at the type of expenses,
it looks something like this:

1. Major jobs such as painting, chimney repair etc.
2. Minor repairs (buying things from Home Depot etc)
3. Buying equipment for yard maintenance etc.

I was about to set up a sub-categories like this:

Household : Maintenance
Household : Repairs
Household : Tools

etc. which roughly matches the type of expenses in #1, #2 and #3.
However, in setting up the categories, Money online help hints that home
improvement and repair expenses should be tracked under the asset
account...I'm confused by that.

So if I paint the house, should that be recorded as in "Increase" in the
asset account, i.e. a transfer from my bank account to the home account?
Or should I just go ahead and create the Household : Maintenance
category and record it as an expense? Money seems to show those
expenses on House View page.

I'm using Money 2004 if it matters.

Thanks.
 
D

Dick Watson

The basic answer is that spending that increases your basis in the property
may be better to track as a transfer to the asset account rather than as a
categorized expense. This is just to make it easier to later account for
your basis. With the current tax law, this isn't nearly as important as it
used to be since selling a house creates taxable capital gains in many fewer
cases than it used to.

What spending increases basis? That's a question for the IRS, not here.
There are IRS publications that treat this. (See
http://www.irs.gov/publications/p551/index.html.) These things are generally
things that are NOT repair/maintenance.
 
E

emma.watson335

The basic answer is that spending that increases your basis in the property
may be better to track as a transfer to the asset account rather than as a
categorized expense. This is just to make it easier to later account for
your basis. With the current tax law, this isn't nearly as important as it
used to be since selling a house creates taxable capital gains in many fewer
cases than it used to.
 

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