Sole proprietorship and capital improvements on primary residence

[Sam Rispaud]

When deducting capital improvements from any profits made on the sale of your primary residence, can these capital improvements be made in the name of your sole proprietorship even if the home is in the name of the individual?

The reason I ask is because I am currently renovating my home and some suppliers (windows, lumber, etc) ask for your business name/tax ID instead of selling to the individual. I want to make sure that making capital improvements in the name of my sole proprietorship will not disqualify me from deducting these improvements when I eventually sell the home, which is in my personal name.

[Jamie Engledow]

The reason they ask for business EIN and such or tax certificate is to sell to you without charging you state tax. If you feel you must give your business info for a better deal, it would be best for you to pay from a personal account, ensure you have records of specifically what materials were needed for the personal project and receipts or invoices that listed those items. If a business purchase was mixed with a personal, circle the personal and write the explanation. Do not deduct the personal expense on your business return! Maintain good records to prove that you did not expense any personal expenses on your business return.