Most people know that when they plan to sell their house it has to be in the best condition possible. Doing renovations and repairs can be a very big expense. Piled on top of moving paying to fix your house for someone else can be a very unwelcome prospect!
A lot of owners look for bargains or try to do the work themselves. They think that this is a great way to save. After all…they aren’t doing the work for their own benefit!
But is Do It Yourself or using unlicensed labor a smart move?
Yes …and No!
The most important consideration is whether it would be advantageous to have proof in the form of a receipt. For major renovations or repairs, having invoices and warranties is beneficial both to show your house as well maintained – and in some cases for income tax purposes.
When renovating to update your house for sale, it is advantageous to show prospective buyers that you have had work done by a professional. In most cases this implies a certain professional quality of work that adheres to local or state standards. Having the work done by a licensed contractor usually comes with a period of warranty. Should anything go wrong, there may be an option for the provider to come back and remedy the issue. This offers a buyer some reassurance that if something should go wrong with the work, that they have someone to contact.
The additional benefit of using licensed contractors is that many repairs to a house may offer certain tax benefits. While renovations to a primary residence typically cannot be used as deductions, there are still advantages when it comes to selling. If you sell and make a profit on your residence, renovations may help lower your tax burden.
If you are selling a property that is not your primary residence, then you may have greater incentive to use licensed contractors. Repairs that keep the property in good condition can be a tax deduction. Many investment property owners think that improvements are also tax deductions, but this tends not to be the case. Most improvement s are calculated as depreciation over several years. The tax benefits of improvements can be very advantageous, but better left to a skilled financial specialist.
There are times when state or local programs offer property owners subsidies to do work.
Often these programs involve energy efficiency, such as the addition of solar panels. If doing this type of work will give your house an edge on the market, it may be worth considering.
In these instances, using licensed professionals is usually mandatory.
The different advantages of using licensed contactors are easy to see. But when can a property owner best use the services of a handy man or do it themselves?
If the repair is something that may be considered truly simple, an owner could very well take care of it themselves.
Painting, polishing floors or changing out hardware or fixtures is usually simple enough that most people can do it. The same is true for most yard maintenance. Many property owners do this type of work themselves.
Where it becomes less clear is when specialized equipment is required.
As an example, while it may be simple enough to change most burnt out light bulbs, it may be better to hire someone to change out the bulbs in an entry chandelier that is thirty feet in the air – if you don’t already own a suitable ladder. In a case like this, there is no advantage to buying a ladder when you are thinking of selling the house or hiring a professional electrician to do the work.
The neighborhood handy man may be a better choice.
In most instances using licensed contractors is an advantage even when selling. It usually comes with quality materials and labor, and there is the additional advantage of paperwork and some sort of a warranty. The best way to know how to maximize any tax advantage for this work is to speak with a tax professional, such as your accountant.
If you are putting your home on the market yourself, having to renovate or do extensive repairs can be a very costly and stressful time. In addition, if selling during the holidays isn't something you wish to consider right now, we can help.
If you have come to the realization that it is time to move right now to have a better life, but your house isn’t ready for market, we can help.
If you are juggling too many responsibilities to sell your house yourself this fall, then there are people who specialize in the sale of properties "as is" - usually within a week to resolve the situation quickly.
Contact us for details.
Next time we will look at disclosures.
So thanks for reading my post. I'm so glad you're here!
And I really look forward to getting into more great stuff in future posts -- so that you can
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