Fall 2007 issue of Horizons

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

If you still incur a taxable gain on your home sale, any capital improvements can be used to increase your cost basis. Improvements such as adding a room, landscaping, or “updating” your kitchen all add to the basis of your home and thus reduce your taxable gain. A gain on the sale of your residence over and above the exclusion amount is taxed to you as a capital gain and is subject to the more favorable federal capital gain rates of 15 percent. A loss on the sale of a personal residence is not deductible. Final Tax Tip With careful planning, individuals who retire and move from their principal residence to their vacation home may be able to take advantage of the exclusion on both homes. In order to do this, the principal residence is sold and the exclusion is taken. Then, the vacation home must be established as your principal residence by such things as residing in the home for at least two years, registering to vote in the new area, and making the new address your tax home when filing returns. • It may be worth noting, after the bad winter storms we recently experienced, it appears the “new” home building projects rarely suffer much damage. • Despite a drop in sales, “traffic” numbers continue to remain decent, if not good at times. However, the days of “order-taking” have passed as sales have become a much more competitive process. • NAHB is working hard to provide information to builders in adjusting to the changing times. Its recent publication, “It’s A Great Time To Buy,” is excellent in emphasizing the opportunities for buying a home in today’s buyer’s market. • Nobody asked me, but it seems more and more of the home buying traffic is being driven from signs and the Internet . . . HAYS’ BITS

Questions? Contact Steve Hays, CPA Partner-in-Charge, Home Builders Services Group 314-290-3336 steve.hays@rubinbrown.com

32 u winter 2007 issue