March 2026 CT

SELLING YOUR HOME... from page 18.

Many large projects are also funded through special assessments. When an assessment is used to fund a capital improvement, the amount assessed to each unit may be treated as an increase to basis, assuming the funds were used for a qualifying capital project. Maintaining adequate records and documentation is essential to support these additions. The Home Sale Exclusion Another important factor in determining tax liability upon the sale of a home is the home sale exclusion. While this exclusion does not directly affect basis, it can significantly reduce or eliminate tax owed upon sale. The IRS allows an exclusion of up to $250,000 for sin gle filers and $500,000 for married couples filing jointly on capital gains from the sale of a primary residence. To qualify, homeowners must meet the ownership and use test, meaning they must have owned and lived in the home as their primary residence for at least two of the five years preceding the sale. Given the rise in home values in recent years, even after factoring in increases to basis, some homeowners may still CONTINUES ON PAGE 22

Exterior improvements can be more challenging to track because they are generally considered common elements and are replaced by the association rather than the indi vidual unit owner. Examples include roofing, siding, drive ways, decking, patios, balconies, retaining walls, and similar projects. Unit owners should review their association’s financial statements each year to identify capital expenditures that

“...the amount assessed to each unit may be treated as an increase to basis...”

may have benefited their individual unit. For example, if a roof services four units, each unit owner may generally allocate one-fourth of the project cost as an increase to basis.

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MARCH 2026