Appreciation

The difference between the increased value of the property and the original value.

When you sell your home, the increased value of the home will, under certain circumstances, be taxable as a capital gain. You'll need to see your tax advisor to learn the specifics for both federal and state laws. There are some exceptions to these tax laws, such as exclusions for first time sales, that may save you a lot of money at tax time. If you are considering selling your home, you'll be wise to investigate these laws prior to selling the home.

When you buy or build a home, you'll want to be careful to keep good records of all the expenses of improving the property - since these expenses are deductions to the capital gains. These records might be as specific as an accounting computer program to record all expenses, or as simple as a shoe box into which every single receipt goes. Both work!

FAQ:

I'd like to learn more about appreciation of my home.
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