[GNC] House renovation Expense or Asset?

[R. Victor Klassen]

Correct. And contrary to what others have said, it is more than a tax issue.  If you put home improvements in an expense account, then when you look at your overall expenses and income at the end of the year, it will be distorted (yes you’ve spent that, but it is an unusual expense).  Having a more realistic amount in the expenses makes forecasting easier.  And that is a not insignificant part of the reason to keep books in the first place, is it not?

> On May 12, 2018, at 1:20 AM, Tony Vanson <tonyvans70 at gmail.com> wrote:
> 
> Thank you for your responses.
> At this stage there are no taxation issues, such as capital gains, to take
> into account as I'm living in S.E. Asia. I am just looking at a simplified
> way of recording all expenses incurred in connection with the renovation.
> I have an asset parent account set up as "House" and a sub-account to that
> as "Renovation". I also have an expense account as "Home Repair". My
> thoughts are that anything spent on Renovation adds to the asset and is
> technically not an expense to be recorded as Home Repair? Am I correct on
> this?
> Cheers
> 
> On Sat, May 12, 2018 at 4:35 AM, Mike or Penny Novack <
> stepbystepfarm at dialup4less.com> wrote:
> 
>> On 5/11/2018 1:21 PM, Tony Vanson wrote:
>> 
>> I assume that when all the construction is finished, the total cost could
>>> be assumed to be treated as an asset increase to the value of the house?
>>> In this instance, would all additional expenses occurring during
>>> construction be treated as a debit on my bank account but a credit as an
>>> asset increase?
>>> I would really appreciate some advice from any of the many knowledgeable
>>> users on this forum.
>>> 
>>> Correct, with the caveat that while we are competent to tell you HOW to
>> do things using gnucash, and while many of us KNOW the the correct answer,
>> we do not hold the qualifications to give accounting/tax advice of this
>> sort.  At least I do not.
>> 
>> Michael D Novack
>> 
>> PS -- Do you understand  WHY this is a tax issue? Again speaking as an
>> "amateur", living expenses are not deductible, maintenance expenses are not
>> deductible, but capital improvement expenses eventually ARE (in effect)
>> deductible from the capital gain which may result when you sell the house.
>> Raising the basis reduces the gain.
>> 
>> --
>> There is no possibility of social justice on a dead planet except the
>> equality of the grave.
>> 
>> 
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> 
> 
> 
> -- 
> *Tony Vanson*
> 
> *The older I get,*
> *the better I was*
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