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If you feel like Tom Hanks in the “Money Pit” maybe these ideas will cheer your up. After all, who can resist saving on taxes? Then again, if you do have a house like the “Money Pit” you’ll need a lot more help than these few tips.
Save Your Remodel Receipts
When you put on a new roof, install a sprinkler system, or re-do the master bathroom, save those receipts. All those expenses will save on taxes by raising your capital gains basis.
Green is Green
California offers a host of rebates and incentives for homeowners. For Sacramento area homeowners, check out SMUD’s list of programs.
If your house is underwater, but you still plan to keep it, ask for a property tax reappraisal. Even though your home has lost value from when you purchased it, your property taxes are still based on the purchase price, not the new lower market value. When you ask the county to reappraise it, they can adjust your property taxes to the current market value.
Sacramento county residents can request an informal review between July 1 and November 30. See more at the County Assessors site here.
Consider a CRUT
By putting highly appreciated assets into a Charitable Remainder Unitrust you can enjoy fixed payments from the principle each year, typically for the rest of your life, and then what’s left (the remainder) goes to charity. This Forbes article has stories of three individuals who took advantage of this planning tool.
Put it in a Trust
Wait you say, transferring your home into a trust doesn’t change your property taxes. Correct, but there are some effects on taxes for your surviving spouse. When properly titled, and transferred into a trust, your surviving spouse will save on taxes by raising their basis. Plus, when your children inherit the property, they get a step up in basis. (Read this primer on basis here) By using a trust, your children avoid probate, making the process of transferring or selling the property faster and cheaper.
Image courtesy of twobee at FreeDigitalPhotos.net