Will You Owe Taxes When You Sell Your Home?

Plus: Best investments to own during a recession, 3 tax-friendly charitable-giving strategies, and more. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=48377&elqTrackId=4a1648728783489a95592188b3fce837&elq=9abc4010f5864a40b259a094d370d5da&elqaid=48377&elqat=1&elqCampaignId=23962) [Improving Your Finances] Improving Your Finances with [Christine Benz]( [Christine Benz] The tax code includes some generous provisions for homeowners: deductions on mortgage interest as well as the ability to exclude a nice chunk of gains on the sale of a primary home. The trouble is that the amount of home-price appreciation that homeowners can shield from taxes when they sell their primary residences hasn’t been indexed to inflation since the exclusion was enacted in 1997. That’s right, 26 years ago! Bill Clinton was in office, we were all getting our sea legs with email and the Internet, and the first Harry Potter book had just hit bookstores. Meanwhile, home prices have escalated nicely in many parts of the country, so the net effect is that many longtime homeowners may find they’re on the hook for taxes when they sell. As [I wrote this week]( that underscores the importance of keeping scrupulous records of your outlays for capital improvements, because those outlays can be added to your home-purchase price to increase your cost basis. It’s not unlike accounting for reinvested dividends and capital gains, but the difference is that the process for documenting capital improvements on your home is all manual and it’s all on you. (Note: This is a case of “[do as I say, not as I do]( I’ve got work to do on the home-documentation front.) Also on the topic of taxes, consider this a friendly reminder to take your required minimum distributions by year-end if you’re subject to them. Affluent retirees love to hate their RMDs, but [I sat down with Susan Dziubinski to discuss some of the silver linings]( including the fact that the age at which you’re subject to RMDs keeps getting pushed out. (If you were born in 1960 or later, your RMDs won’t commence until you’re age 75.) Finally, it’s hard to know what to make of the current market and economy. Lately, the threat of “higher for longer” interest rates and inflation seems to be bugging stocks and bonds; a higher dollar, which makes U.S. goods more expensive overseas, isn’t helping. We invited one of our favorite market commentators, [CNBC’s Michael Santoli (ex of Barron’s), onto The Long View podcast]( to discuss what to make of the current economic and market environment. One of the topics was recession and whether the Federal Reserve will be able to stick a soft landing. Given that recessionary worries are still top of mind for a lot of investors, I appreciated [Amy Arnott’s look at the asset classes that have historically performed best and worst amid previous economic downturns](. History doesn’t repeat, as the saying goes, but it usually rhymes. With warm regards, Christine Benz [Will You Owe Taxes When You Sell Your Home?]( Documenting improvements can boost cost basis, lower the odds that you’ll owe. [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] [Michael Santoli: Decoding an ‘Indecisive Market’]( The senior CNBC markets commentator on inflation, Fed policy, the economic outlook, stock market risks, and more. [Listen Now]( [Good News About RMDs in 2023]( Increases to the required minimum distribution age, lower penalties, and more. [Watch Now]( [Best Investments to Own During a Recession]( When the economy slows, some assets are safer than others. [Read More]( [3 Tax-Friendly Charitable-Giving Strategies for Retirees]( Consider these ideas before filing your taxes. [Read More]( Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2023 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602