*this transcript was taken from our Tax Tip Tuesday post on Youtube. You can watch the video here.
Hey everyone, welcome to another tax tip Tuesday. Today I’m going to be talking about something that’s very poignant from my current situation. So as some of you might know, I am building a house and that really got me thinking about, well what are some of the aspects of building a house that you would need to know tax wise? Well the number one thing I could think of was when you’re building a house, what sort of records should you keep for tax purposes? You know, at some point you’re going to be selling the house or maybe gifting it to your children or maybe you’ll die in it, who knows, and haunt the place. But what you’ll end up doing is needing to keep all those records.
So what you’ll want to do is as you’re building, your builder should be giving you copies of all the receipts and everything and hopefully making a nice spreadsheet, going and tracking thing, the budget versus actual, etc. So you’ll want to keep all of those items. And for me I’m just keeping them in Google Drive and I’ll have them digitally for hopefully ever unless Google goes out of business or something, ha, ha. Unlikely to happen. But you know, who knows.
So the important thing is you can keep all that information and keep a nice detailed list as you’re going along and then you just save it and you have that information. That information will also be important too, let’s say if you are like me and you have an office in your home, then you’ll want that information in order to depreciate a portion of your home for your business.
Another thing that you might want to think about is as you’ve lived in your house and you make improvements along the way or you change things, you want to keep records of those as well because that information adds to your basis for any big things.
One little extra tax tip for people that live in states like myself, in Tennessee we don’t have a state income tax, we have a pretty high sales tax actually. And so instead of being able to deduct income tax, we’re able to deduct sales tax. So you can actually have your builder go and portion out the actual cost versus what the sales tax is on each item, and so then that way you can take a deduction in the year that you actually pay off those invoices for the sales tax. Now that’s something you’ll have to keep record of because technically you can’t deduct that again when you go to sell the house, but it’s one way to increase some extra deductions that you probably wouldn’t have really had in the past.
So I hope you found this tip really helpful. Make sure to like us on Facebook, follow us on Twitter, follow on LinkedIn to get all these great tips. Check out our blog as well and our YouTube channel. We’re constantly going and trying to post these sort of tips, etc. So if you have any questions for me, let me know. And if you have built a house and you have any great tax saving tips please comment, then that way everyone can share in your knowledge. Appreciate it. Thanks so much. Bye.