How to track cost basis on my home?

We’ve recently sold our home of 28 years, and are in the process of buying another. Tallying capital investments on our former home, for purposes of calculating tax cost basis, was made much easier by 6 years of Tiller data. How great it would have been to have had Tiller data for all that time! Since increasing cost basis can have a large impact on tax liability, and I’ve got this opportunity to start fresh, I’m weighing alternative tracking methods.

If you’re doing this, or have ideas on how best to do it, I’d appreciate hearing your thoughts!

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I use a combination of Category, Note, and Tags to track this. The Category is just Home Improvement, the Note is a brief description (so many Home Depot/Amazon purchases), the Tag is specific to the house. We are also in the process of buying and selling our home, so yes a fresh start with the new house is high on my list right now.

I also keep a computer folder filled with PDF copies of the receipts and contracts specifically for the house. The PDF filenames start with a date so that they sort easily. And that ties back into matching things up with the tagged records in my Tiller file.

I use the same system for our HSA records.

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This is a great idea @GregC and I haven’t seen much discussion here about tracking adjustments to the cost basis of your home.

One simple approach might be using a single tag for those transactions (perhaps with a name like 123 Hill Street Cost Basis).

Those investments (like big home improvement projects) or credits (like insurance payouts) might get categorized to different categories or groups over the years. That’s why using a tag for individual transactions rather than an entire category/group seems like the right move to ensure you capture every transaction that might be relevant.

If you tag each transaction that will be applicable to cost basis calculations at the time it arrives in your spreadsheet, later you can generate a Tags Report of all those tagged transactions and pass it along to your accountant for review.

Having worked in a tax firm before, if you roll in with that level of organization, you might be your CPA’s new favorite client! :smile:

I know there are some financial professionals who pop in from time to time so I’m curious to hear of their recommendations on this too.

Edited to add: @martha.rudkin has a great solution above too!

@GregC this is a great discussion topic and I’m eager to hear others thoughts here as well. With our sell and recent repurchase of homes this is something that tiller will be able to assist with that had not even crossed my mind.

A tag is what I’ve been using possibly incorrectly for this purpose (utilities for different properties as well as home repairs) but with the advice and additional research i may change things up to use a seperate tag for cost basis purposes since those 2 may not be applicable to cost basis.

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The consensus here seems to be that tags are the best way to capture additions to cost basis. I concur. @bentyre1, you may know that you can stack tags with a comma and the Tags Report will filter them individually, so you can have Utilities,CostBasis both on the same transaction.

@krista, @martha.rudkin, you both pointed out that using tags for cost basis keeps the category free for general use. @krista, as I’m likely to seek out a CPA for guidance on reporting the 28-year cost basis of the home we just sold, you give me encouragement!

@martha.rudkin, I like your filing system for receipts and contracts. In my case, I hyperlink the Note field in Tiller to a Google Doc of the scanned/saved receipt. For instance, the myriad transaction splits for taxes and fees that came out the proceeds of the sale of our house, are all hyperlinked to the disclosure documents shared at the closing. (Hyperlinking the Description for vendors and service providers to their websites is another satisfying way of using Tiller to integrate information.)

Appreciate the comments! Keep 'em coming!

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Thanks for the follow up here @GregC - did you decide on a way you’d like to do this or do any of the replies here fit as the “solution” ? If so, feel free to mark them