Financial Tips for Homeowners
There are several things that you can and should do as a homeowner to put yourself in the best possible financial situation. Here are some general tips. For guidance specific to your situation please call the Copper Leaf Financial office in Vermont at 802.878.2731.
1. Create a home inventory for insurance purposes. You'll be glad you did if you ever need to file an insurance claim for theft or damage to your home. Consider using a home inventory app or written list combined with photos, videos, and receipts to inventory your possessions. Be sure to store your inventory offsite in a safe location.
NOTE: Copper Leaf Clients can use their secure online Vault for this purpose.
2. Pack a financial 'go bag' that you can grab quickly if you ever need to leave your home in a hurry. Include in it copies of your insurance policies (homeowners, flood, and auto), contact information for your insurance companies, some cash in case ATMs are not working, and the key to your safe deposit box.
3. Save your home improvement receipts. If you replace your windows, remodel your kitchen, build a new deck, or make other home improvements, save your receipts. They may help you avoid or reduce taxes when you sell your home. That's because amounts you spend on home improvements increase your home's basis. For example, if you purchase a home for $1 million and spend $500,000 on improvements, your home's adjusted basis would be about $1.5 million. Let's say you sell your home for $1.7 million, resulting in a net gain of $200,000. Because individuals can generally exclude up to $250,000 ($500,000 for joint filers) of the gain from the sale of a main home, none of the gain in this example would be taxable. But if you do not keep track of your home improvement expenses and you do not adjust your home's basis, your net gain would be $700,000 and some of it would be taxable.
4. Use a tax credit to cover part of the cost of going green. The federal government currently offers a 30% tax credit for adding qualified solar, geothermal, wind, and fuel cell equipment to your home. However, the credit will decrease in value after 2019 so if you have been thinking about adding alternative energy equipment to your home, this may be the year to do it!
5. Consider buying umbrella insurance. The more you own and earn, the more you have at risk from a lawsuit if someone is injured on your property. Homeowners insurance typically provides some liability coverage, but it may not be enough in your situation. You can expand your coverage and help protect your assets in a major lawsuit with personal umbrella insurance, a type of policy that provides additional liability coverage beyond the limits of your primary insurance policies.
For additional guidance specific to tax tips for Homeowners please click here.
Article published in Copper Leaf Financial publication Eye on Money - May/June 2019 issue.