Buying a home on Alabama’s Eastern Shore involves more than finding an attractive listing. A useful plan connects the location, the condition of the property, your ownership budget and the steps between an offer and closing. Whether you are considering Fairhope, Daphne, Spanish Fort, Montrose or Point Clear, start with the details of the home you are actually buying.
Define your search before booking tours
Separate your needs from your preferences. Consider bedrooms, workspace, storage, stairs, outdoor space and maintenance. Write down your regular destinations and test the routes from shortlisted properties. Use our community information to begin exploring, then compare Fairhope, Daphne and Spanish Fort using the same priorities.
Build a budget for ownership
A listing price does not describe all the costs of owning a property. Ask for property-specific estimates for insurance, taxes, association charges, utilities and expected maintenance. Leave room for moving costs and updates you intend to make after closing.
If you plan to finance the purchase, speak with lenders early and compare their written estimates. The Consumer Financial Protection Bureau’s homebuying resources explain the mortgage process and provide tools for comparing offers. Use your lender’s figures for your circumstances rather than a generic online payment estimate.
Research the property as well as the neighborhood
Read available disclosures and association documents. Ask about the age and condition of major systems, previous work and records for improvements. Confirm information that affects your intended use with the relevant authority or professional.
For a Gulf Coast property, ask your insurance professional to evaluate the coverage appropriate to that address and obtain quotes during your decision process. Do not assume that a policy, cost or risk assessment for another house applies to the one you are considering.
Understand the inspection and appraisal
An inspection and an appraisal serve different purposes. Our appraisal-versus-inspection article explains the distinction. HUD’s homebuying guidance also includes getting a home inspection among the steps buyers should consider.
Discuss inspection arrangements and the deadlines in your contract before proceeding. Review questions with your inspector and discuss your options with your real estate professional. Avoid treating a listing description or an appraisal as a replacement for understanding the property’s condition.
Keep the transaction organized
Once you are under contract, keep a clear calendar of the agreed deadlines and requests from the lender and closing team. Ask who is responsible for each next step. Read documents and raise questions early rather than waiting until the closing appointment.
If you must also sell a home, discuss the timing of both transactions before committing to a plan. Our seller preparation guide can help you organize that side of the move.
Start with local guidance
Judy Niemeyer can help you narrow your Eastern Shore search, arrange showings and compare homes against your priorities. Begin with available homes for sale, or read the Fairhope relocation guide if you are getting familiar with the area.
Call Judy at 251-583-5923 to discuss the location, property features and timeline that matter to you.
Choosing between Fairhope, Daphne and Spanish Fort starts with the life you want to build, rather than a list of places ranked from best to worst. Your commute, the type of home you need and the places you visit each week can matter more than a city’s reputation. All three belong on an Eastern Shore home-search shortlist, but the right fit depends on the specific property and your routine.
Start with your everyday destinations
Write down the places you need to reach regularly: work, shopping, healthcare, recreation and family. Then test the routes from actual homes you are considering. Visit at the times you would normally travel. Avoid relying on a single weekend drive or a generic city-to-city travel estimate.
Fairhope: explore the waterfront and the surrounding neighborhoods
Fairhope’s municipal pier and parks provide useful starting points for getting to know the community. The city’s official parks and trails information describes the pier at the west end of Fairhope Avenue and local recreational spaces. A visit can help you decide how important access to those places is to your home search.
Compare homes in different parts of Fairhope rather than treating the whole area as one neighborhood. If being near a particular destination matters, measure the route from the property itself. Our moving to Fairhope guide offers more questions to consider before touring homes.
Daphne: look at how community activities fit your routine
Daphne’s official city website lists community events, library activities and city services. These resources can help you explore everyday life beyond a property listing. Check current schedules and access information before making plans.
For each Daphne property, compare the layout, yard, maintenance needs and routes to the destinations on your list. A home that fits your budget still needs to fit the way you will use it.
Spanish Fort: compare the actual homes, not assumptions
Include Spanish Fort properties in the same practical comparison. Start with your commute and essential destinations, then look at available home styles and the features that matter to you. Visit the area around each property and check details with the relevant city or county office when needed.
Keep your criteria consistent across all three communities. That makes it easier to recognize a good match without assuming that every home in one city offers the same experience.
Use a property comparison checklist
Does the home meet your bedroom, storage and accessibility needs?
Have you tested the routes you will use most often?
What maintenance or updates would the property require?
Are there association rules or fees that affect your plans?
Have you checked property-specific ownership costs and any restrictions?
Have you confirmed any school assignment directly with the school system if it matters to your decision?
Which community should you choose?
There is no single answer for every buyer. Shortlist properties in more than one community and compare them against the same needs, wants and budget. A specific home may change how you feel about an area once you have toured it and tested your routine.
Moving to Fairhope, Alabama can be exciting, whether you’re relocating for work, planning for retirement, looking for a second home, or simply ready for a change of scenery.
But finding the right home in Fairhope involves more than scrolling through listings and choosing the house with the prettiest kitchen.
The home itself matters, of course, but so do its location, your daily routine, the amount of maintenance you want, and how the property fits your plans for the next several years.
If you’re considering making Fairhope home, here are a few things worth thinking about before you begin your search.
Moving to Fairhope, Alabama? Get to Know the Area
One of the best things you can do before buying is spend some time exploring.
Drive around Fairhope outside of the areas you may already know. Look at different types of neighborhoods and properties, and pay attention to how each location would fit your everyday life.
You may love the idea of being close to downtown, while another buyer may prefer additional space farther away from the center of town.
There isn’t one answer that’s right for everyone. That’s why it helps to begin your search based on how you actually want to live, rather than simply searching for the most popular area.
If you’re still getting familiar with the area, take a look at our Eastern Shore community information to learn more about Fairhope, Daphne, Spanish Fort, Montrose and Point Clear.
Think About Your Everyday Routine
When you’re visiting from out of town, it’s easy to experience Fairhope like you’re on vacation. Buying a home is different.
Think about the places you’ll regularly need to reach, including work, shopping, healthcare, family, recreation and other everyday destinations.
Drive some of those routes while you’re here. A home that looks perfect online may feel very different once you understand its location in relation to the places you’ll visit most often.
Decide What Kind of Home You Actually Want
Before looking at dozens of properties, make a list of your priorities.
Consider things like:
Number of bedrooms and bathrooms
Home office space
Garage and storage
Yard size
One-story versus multi-story living
Newer construction versus an established home
Outdoor living space
How much maintenance you’re comfortable handling
Separate that list into needs, wants and deal breakers. It will make your Fairhope home search much more focused.
Older Home or Newer Construction?
Fairhope buyers can encounter everything from established homes with character and mature landscaping to newer construction with contemporary layouts and finishes.
Neither is automatically the better choice.
An established home may offer a location or setting that’s difficult to reproduce, while newer construction may appeal to buyers looking for modern layouts and fewer immediate updates.
The right choice depends on what matters most to you. Judy can help you compare different properties and understand how each one fits your priorities.
Don’t Forget the Cost Beyond the Purchase Price
Your budget shouldn’t stop at the listing price.
Depending on the property, you’ll also want to consider homeowners insurance, property taxes, association fees, utilities and expected maintenance.
If you’re relocating from another part of the country, some Gulf Coast ownership considerations may also be new to you.
The important thing is to research those costs for the specific property you’re considering rather than making assumptions about the entire area.
Start Exploring Homes for Sale in Fairhope
Once you have a better idea of the location, home style and features you’re looking for, the next step is seeing what’s available.
If you see something that interests you, Judy can help you learn more about the property, arrange a showing and compare it with other homes that may fit your needs.
You Don’t Have to Figure Out Fairhope Alone
Online listings are a great place to start, but they can’t tell you everything about a home or how a particular location may fit what you’re looking for.
That’s where local experience can make a difference.
Judy Niemeyer has called Fairhope home since 1976 and has decades of experience helping buyers and sellers throughout the Eastern Shore of Mobile Bay.
Whether you’re moving to Fairhope from another state or already live nearby, Judy can help you narrow your search and navigate the buying process from start to finish.
Ready to Start Your Fairhope Home Search?
Whether you’re relocating, searching for your next home, planning for retirement or looking for a vacation property, Judy can help you find properties that match what you’re actually looking for.
For golfers, Baldwin County, Alabama, is the ultimate destination where lush greens, stunning views, and a thriving golf culture come together. Nestled along the Gulf Coast, this hidden gem offers more than just picturesque courses—it’s the perfect place to live the dream of golfing year-round. Whether you’re an avid player or looking for a home that embraces the golf lifestyle, Baldwin County blends scenic courses with golf-centric communities for an experience like no other.
Top 3 Golf Courses in Baldwin County
The top 3 golf clubs in Baldwin County, Alabama, are typically recognized for their exceptional course design, amenities, and overall golf experience. Based on reputation, membership options, and the golfing experience they provide, these are the top three:
Tucked away in Point Clear, Lakewood Golf Club is more than just a golf course—it’s a prestigious destination. As part of the renowned Robert Trent Jones Golf Trail, Lakewood features two stunning courses: the Azalea and the Dogwood. Both courses are celebrated for their rolling hills, Southern pines, and breathtaking landscapes.
Why it’s Top-Rated: Lakewood Golf Club is arguably the most prestigious course in Baldwin County. As part of the renowned Robert Trent Jones Golf Trail, it offers two breathtaking 18-hole courses: the Azalea and Dogwood courses. The course is known for its stunning views, historic charm, and challenging fairways that wind through Southern pines.
Amenities at Lakewood include a state-of-the-art fitness center, multiple swimming pools, 10 hydro-courts, and dining options, with access to the historic Grand Hotel Golf Resort & Spa.
Why it’s Top-Rated: Steelwood is a private, members-only club designed by 1976 U.S. Open Champion Jerry Pate. The course, spanning over 7,000 yards, features natural elevation changes and stunning views of Steelwood Lake. Known for its exclusivity and challenging play, Steelwood is ideal for avid golfers who want a high-end experience.
Why it’s Top-Rated: Consistently ranked as one of Alabama’s best public courses, Kiva Dunes offers an exceptional golfing experience right on the Gulf Coast. The course is challenging but playable for golfers of all levels, and it boasts stunning views of the Gulf of Mexico. Kiva Dunes has hosted PGA and LPGA events and is a favorite for visitors to the area.
These three courses offer the best mix of design, beauty, and challenge, making them the standout golf destinations in Baldwin County. Whether you’re looking for a world-class resort course or a private, exclusive membership experience, or one of the best public courses in Alabama, these clubs represent the top choices in the region.
Your Dream Home on the Green
Fairhope: A Golfer’s Paradise with Charm, History, and Art
Fairhope, Alabama, is a vibrant community where culture, golf, and history blend seamlessly. Stroll along the picturesque streets, where you’ll find an eclectic mix of boutiques, galleries, and restaurants, offering a delightful combination of Southern charm and modern flair. Each year, the town comes alive during its renowned Annual Art Festival, a celebration of local and national artists.
Founded in 1894 as the world’s oldest and largest single tax colony, Fairhope was established on the principle that land should be taxed in a way that benefits the entire community. This pioneering tax model continues to shape the town’s forward-thinking culture today.
The blend of stunning views, rich history, and vibrant arts scene make Fairhope not only an incredible place to live but also a haven for golfers who want a home near world-class courses with all the benefits of small-town charm and big-town culture.
Point Clear Woods (Fairhope) Point Clear Woods is the pinnacle of Southern luxury, offering a serene, gated community where privacy and tranquility meet world-class golf. This exclusive neighborhood is known for its majestic oak trees and expansive lots, providing a peaceful haven for those seeking both beauty and serenity.
Residents of Point Clear Woods also enjoy direct access to Lakewood Golf Club, with the course just a short walk away, making it easy to spend your afternoons teeing off.
A prime example of what Point Clear Woods offers is the listing at 17342 Wildwood Court, a 5-bedroom, 4.5-bathroom estate spanning over 5,400 square feet. This Southern-style home blends luxury with charm, featuring a peaceful cul-de-sac location and easy access to Lakewood Golf Club, making it a perfect choice for golfers.
Another stunning home in the area, 6120 Oakwood Lane, boasts 4 bedrooms and 4 bathrooms, combining Southern craftsmanship with modern style. This home offers tranquil surroundings and plenty of space, ideal for those who want both comfort and access to world-class golf.
Point Clear: A Community Like No Other
Exclusive Access to Lakewood Golf Club
Residents of Point Clear Woods enjoy the unique privilege of having access to Lakewood Golf Club, one of the most prestigious golf courses in the area. While membership is not automatically included with property ownership, residents can apply for membership, which provides unlimited access to golf, tennis, swimming, and the club’s fitness facilities.
Architectural Elegance Homes in Point Clear Woods are designed to complement the area’s natural beauty. The architecture reflects Southern charm with expansive layouts, high ceilings, and large windows offering stunning views of the surrounding landscapes.
Diverse Community Point Clear is a welcoming community, great for everyone. Located just minutes from highly rated schools, shopping, marinas, and beaches, the neighborhood offers easy access to everything you need. It’s been celebrated for its strong community spirit and family-friendly atmosphere, earning accolades such as “2022 Best Places to Raise a Family in Baldwin County” by Niche.com.
For those who love outdoor recreation, Point Clear is an ideal location. Residents have access to numerous parks, trails, and Mobile Bay, making it perfect for activities like fishing, boating, and enjoying the great outdoors. Whether you’re looking for a peaceful retreat or an active lifestyle, this neighborhood offers something for everyone.
As Neighborhood Scout puts it, “If you are planning to retire in Alabama, Point Clear should be on your must-see list. For many reasons, it may be considered a retiree’s dream neighborhood.” Read more
Point Clear Market Data The median listing price in Point Clear as of April 2025 is $1.1M. According to Realtor.com, Point Clear was considered a buyer’s market in April 2025. So now is a good time to be teeing up to find your dream property in one of these premier golfing communities.
As of April 2025, there were 128 homes for sale in Point Clear, ranging from $45.8K to $7.5M. However, only 2 homes were available in Point Clear Woods—both listed by Ashurst Niemeyer Real Estate—making it an extremely sought-after community in the area.
Why Baldwin County?
Beyond the greens, Baldwin County offers a high quality of life. The relaxed coastal lifestyle features dining, shopping, and cultural events that ensure there’s always something to enjoy. Whether it’s a day at the beach, a stroll through historic Fairhope, or a night out at a local restaurant, Baldwin County has it all.
Ready to Live the Golfing Dream?
If you’re ready to make golf more than just a game and turn it into your lifestyle, Baldwin County has the perfect home waiting for you. Whether you’re eyeing a property on a world-class course or a luxurious home within a golf-centric community, Ashurst Niemeyer Real Estate is here to help you find your dream home. Let us guide you to the perfect spot where stunning fairways and breathtaking views are just steps from your front door. Reach out today and discover why Baldwin County is a golfer’s paradise!
TimberCreek Golf Club– A 27-hole championship course designed by Earl Stone, featuring scenic fairways and challenging layouts.
Lake Forest Golf Club– A 27-hole facility with a mix of 18-hole and 9-hole courses, offering a variety of golfing experiences.
Fairhope
Lakewood Golf Club – Lakewood Golf Club is arguably the most prestigious course in Baldwin County. As part of the renowned Robert Trent Jones Golf Trail
Rock Creek Golf Club
Located in Fairhope, Rock Creek Golf Club offers a gorgeous 18-hole course designed by Earl Stone. The course features winding fairways and stunning vistas that provide both a challenge and a serene experience.
Quail Creek Golf Course– An 18-hole course offering a friendly environment and well-maintained fairways.
Loxley
Steelwood Country Club stands out as a premier golfing destination in Baldwin County, offering a blend of challenging play, natural beauty, and exclusive amenities. If you’re considering a golfing lifestyle in the area, Steelwood is a club worth exploring.
Foley
GlenLakes Golf Club– A 27-hole course offering a mix of water features and rolling hills, providing a blend of beauty and challenge.
Gulf Links Golf Center– An executive-style 18-hole course with a par 64 layout, suitable for golfers of all skill levels.
Gulf Shores
Craft Farms Golf Resort– Home to two 18-hole championship courses: Cotton Creek and Cypress Bend, both designed by Arnold Palmer.
Gulf Shores Golf Club– An 18-hole, par 71 course offering a traditional golfing experience.
Kiva Dunes Golf Club– An 18-hole course ranked among Alabama’s best public courses, offering stunning Gulf Coast views.
Peninsula Golf & Racquet Club– A 27-hole course nestled in a tranquil, wooded setting, providing both challenge and beauty.
Orange Beach
Orange Beach Golf Center– Features a 9-hole, par 3 course, lighted driving range, and practice facilities, catering to golfers of all levels.
Spanish Fort
Fairways Indoor Golf Clubin Spanish Fort offers a state-of-the-art facility with high-definition golf simulators, allowing players to enjoy the sport indoors. The facility provides an experience above and beyond what is seen on a traditional outdoor course.
Elberta
The Preserve at Soldiers Creek– An 18-hole championship course offering a peaceful combination of natural beauty and challenging play.
Whether you’re a seasoned golfer or a beginner, Baldwin County offers a diverse range of courses to suit every skill level and preference. From the historic designs at Lakewood Golf Club to the coastal challenges at Kiva Dunes, there’s a course waiting for you to tee off. If you are considering a move to the area, explore our Eastern Shore community guide or search homes for sale in Baldwin County.
It’s hard to believe but August is almost over, and hopefully cooler weather is coming our way. The heat this summer has been brutal. Hopefully hurricanes will continue to stay away.
Our market has been very unpredictable. Homes that we think will sell quickly can take longer to sell. Our inventory is still extremely low. We have only 375 active listings from Spanish Fort to Point Clear. Out of the 375, 119 are brand new construction. 308 homes are under contract with 140 brand new construction. Since January 1, 2023, we have had 1,421 homes to close with 482 of this new construction. Most of the new homes are priced in the lower range.
The big difference between new and resale is gold certification, which gives you reduced insurance rates. Please remember when you get a new roof, verify that the roofer will certify it. Once certified, you can claim that the roof is fortified. Homes with older roofs really increase home insurance premiums.
The major obstacle in today’s world of real estate is the increasing mortgage rates. Today a 30-year mortgage with 20% down is 6.75%. According to one lender, rates are predicted to go up to 8%. Hopefully this prediction is not true. Of course, cash is big today.
Market wise, between now to Labor Day, our market slows. Right now, so many buyers are busy getting their children back to school. But after Labor Day, they get back in the action.
If you have any questions about the market, please reach out to me..
Spring will be upon us before we know it. As most of you know, Judy Niemeyer is a name that is recognized as an agent who knows the market in Fairhope, Montrose, Daphne, Spanish Fort and of course Point Clear. Locals call this area, the Eastern Shore of Alabama. My real estate career began in 1979, and oh how our homes have changed since then. Gold and green were the main colors back in 1979 and wallpaper was big. Wallpaper is coming back and I thought I would never say that. White is big and neutral is the new game in town. Accessories are being used to add the warmth.
If you are ready to make a change in your home, you may ask “Where should I start?” Most people like to start in the kitchen and Judy says YES!!!. Step back and give your kitchen a critical eye. Start pulling up suggestions either from internet sites such as Pinterest or Houzz, magazines, or even open houses in newer neighborhoods. If you need an outside eye, consult a kitchen designer but first think of budget. Get a notebook and start making a plan!
Appliances always show age, especially stoves. If you’ve had yours for years, go out and buy a new one. This is one of least expensive changes in a kitchen and makes an easy and immediate impact. Stainless has been popular for many years and still seems to be in style. Gas stoves are very popular and are favored by people who love to cook. Cabinet depth refrigerators certainly enhance the look of a kitchen, but they are usually more expensive.
Cabinets designs are simpler than they used to be. Shaker or slab doors are currently in style and present a clean and sleek look. In most cases, just replacing doors and adding hidden hinges will make a tremendous difference. Paint instead of stain is currently more common. Pull-outs shelves and Lazy Susan corners are a great way of utilizing your storage space if you are getting all new cabinets. Keep your kitchen color scheme as neutral as possible. Color can be added by using art and accessories.
Simple lines are fashionable. Lighting needs to flow. Quartz on countertops is used more today instead of granite or marble due to its versatility and resilience. Some people add depth to the countertop to create an additional dining space. Choose a simple backsplash but also keep it neutral. You do not want the updates to go out of style. I love a separated farm sink. If you replace the countertops, then choose a neat sink.
It can be tough to choose hardware that compliments your overall design. If your cabinet design is simple, stick with a simple pull. When choosing a faucet, consider spout height, pull down vs conventional, single vs. multiple handles and finish. Single handles are much more convenient to use as you can control with one hand. I recommend buying one that is easy to maintain. Pay for quality but easy maintenance.
Take your breakfast area and make it happy with comfortable chairs. This is a great gathering spot in a kitchen.
Updated kitchens bring a wow to a home. Have fun with the updates but remember start with a budget.
What’s the Difference between an Appraisal and a Home Inspection?
Quick answer: A home appraisal estimates a property’s market value, often for the mortgage lender. A home inspection evaluates the home’s condition and identifies issues a buyer may want to investigate. They serve different purposes, and an appraisal does not replace an inspection. For more guidance, read our Eastern Shore home-buying guide or search homes for sale in Fairhope, Daphne and Spanish Fort.
If you’re planning to buy a home, an appraisal is an important step in the process. It’s a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. It’s also a different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction. Here’s the breakdown of each one and why they’re both important when buying a home.
Home Appraisal
The National Association of Realtors (NAR) explains:
“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”
When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.
Appraisal results can be especially important when the agreed purchase price differs from the appraised value. Market conditions change over time, so buyers should review the appraisal, discuss any gap with their lender and real estate professional, and understand their options under the purchase agreement.
However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.
Home Inspection
Here’s the key difference between an appraisal and an inspection. MSNexplains:
“In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home.”
The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.
Bottom Line
The appraisal and the inspection are critical steps when buying a home, and you don’t need to manage them by yourself. Let’s connect today so you have the expert guidance you need to navigate through the entire homebuying process.
Welcome to our Fall! Mornings are beautiful with lower temperatures and beautiful skies. Of course, you have to imagine fall leaves because in the South, our leaves stay green. Can you believe that Thanksgiving is around the corner?
What a year 2020 has been. It has been a tough year for all of us. It reminds me of a very bumpy road, smooth in sections, and then a rut comes and bumps us off our path. Covid-19 was the first issue that bumped us. Masks became the new norm. Then Sally struck us with unbelievable winds and destruction. Now, we sit back and see what is next. Is it another Covid-19 burst or just the flu? Who knows?
Thank goodness, our real estate market has been very active. Interest rates continue to be very low. It is a great time for people to sell and buy. A lender last week quoted a 30-year interest rate of 2.8% which is hard to believe. Even with these low interest rates, buyers are still very opinionated. Selling a home is not as easy as the general public thinks.
Let’s compare 2019 to 2020:
Presently we have 523 active homes on the market from Spanish Fort to Point Clear with 460 homes under contract. If all of these homes close, 2020 will be an incredible real estate year.
If you have questions, please feel free to call me. I always love to hear from you!
Keeping track of the cost of capital improvements to your home can really pay off on your tax return when it comes time to sell.
It’s no secret that finishing your basement will increase your home’s value. What you may not know is the money you spend on this type of so-called capital improvement could also help lower your tax bill when you sell your house.
Tax rules let you add capital improvement expenses to the cost basis of your home. Why is that a big deal? Because a higher cost basis lowers the total profit—capital gain, in IRS-speak—you’re required to pay taxes on.
The tax break doesn’t come into play for everyone. Most homeowners are exempted from paying taxes on the first $250,000 of profit for single filers ($500,000 for joint filers). If you move frequently, maybe it’s not worth the effort to track capital improvement expenses. But if you plan to live in your house a long time or make lots of upgrades, saving receipts is a smart move.
What Counts As a Capital Improvement?
Although you may consider all the work you do to your home an improvement, the IRS looks at things differently. A rule of thumb: A capital improvement increases your home’s value, while a non-eligible repair just returns something to its original condition. According to the IRS, capital improvements have to last for more than one year and add value to your home, prolong its life, or adapt it to new uses.
Capital improvements can include everything from a new bathroom or deck to a new water heater or furnace. Page 9 of IRS Publication 523 has a list of eligible improvements.
There are limitations. The improvements must still be evident when you sell. So if you put in wall-to-wall carpeting 10 years ago and then replaced it with hardwood floors five years ago, you can’t count the carpeting as a capital improvement. Repairs, like painting your house or fixing sagging gutters, don’t count. The IRS describes repairs as things that are done to maintain a home’s good condition without adding value or prolonging its life.
There can be a fine line between a capital improvement and a repair, says Erik Lammert, former tax research specialist at the National Association of Tax Professionals. For instance, if you replace a few shingles on your roof, it’s a repair. If you replace the entire roof, it’s a capital improvement. Same goes for windows. If you replace a broken window pane, repair. Put in a new window, capital improvement.
One exception: If your home is damaged in a fire or natural disaster, everything you do to restore your home to its pre-loss condition counts as a capital improvement.
How Capital Improvements Affect Your Gain
To figure out how improvements affect your tax bill, you first have to know your cost basis. The cost basis is the amount of money you spent to buy or build your home including all the costs you paid at the closing: fees to lawyers, survey charges, transfer taxes, and home inspection, to name a few. You should be able to find all those costs on the settlement statement you received at your closing.
Next, you’ll need to account for any subsequent capital improvements you made to your home. Let’s say you bought your home for $200,000 including all closing costs. That’s the initial cost basis. You then spent $25,000 to remodel your kitchen. Add those together and you get an adjusted cost basis of $225,000.
Now, suppose you’ve lived in your home as your main residence for at least two out of the last five years. Any profit you make on the sale will be taxed as a long-term capital gain. You sell your home for $475,000. That means you have a capital gain of $250,000 (the $475,000 sale price minus the $225,000 cost basis). You’re single, so you get an automatic exemption for the $250,000 profit. End of story.
Here’s where it gets interesting. Had you not factored in the money you spent on the kitchen remodel, you’d be facing a tax bill for that $25,000 gain that exceeded the automatic exemption. By keeping receipts and adjusting your basis, you’ve saved about $5,000 in taxes based on the 15% tax rate on capital gains. Well worth taking an hour a month to organize your home improvement receipts, don’t you think?
The top rate for most homesellers remains 15%. For sellers in the 39.6% income tax bracket, the cap gains rate is 20%.
Watch Out for These Basis-Busters
Some situations (below) can lower your basis, thus increasing your risk of facing a tax bill when you sell. Consult a tax adviser.
If you use the actual cost method and take depreciation on a home office, you have to subtract those deductions from your basis.
Any depreciation available to you because you rented your house works the same way.
You also have to subtract subsidies from utility companies for making energy-related home improvements or energy-efficiency tax credits you’ve received.
If you bought your home using the federal tax credit for first-time homebuyers, you’ll have to deduct that from your basis too, says Mark Steber, chief tax officer at Jackson Hewitt Tax Services.
Today I attended a wonderful seminar on flood insurance guidelines and fortified homes. In our area of Fairhope/Point Clear, our home owner’s insurance rates can be higher than in other parts of our state of Alabama due to our location being hurricane proof. Tips for you, if you live on the bay or in areas that might have an issue on flooding–please get an elevation certificate. If you have a elevation certificate, do not loose it. Your insurance agent will want a copy of it.
In insuring homes, the age of the roof, as well as the electrical and plumbing upgrades are big questions of an insurance agent. If you replace your roof, make sure you take the steps to get it certified. Certification normally costs about $400-$500 but needs to be done while the roof is being replaced. Photos need to be taken to show how the roof is being installed. In our city, a permit is required and roofers have to comply with the city of Fairhope guidelines.
If your home was gold certified when it was built, you must have a certification from the builder. This certification is good for 5 years. All certifications will give an expiration date. Home owners need to contact a local company that can re-certify your home which costs can vary between $150 to $300. Beware of the recertification.
FEMA flood insurance will expire on November 21st, 2019 unless Congress extends it. The House has approved the bill titled HR3167 which is now in the Senate’s hands. Hopefully this will be approved and no extension will be necessary. Limitations on FEMA is $250,000 for structure and $100,000 for contents. If you need more coverage, insurance agents encourage looking at private companies and compare costs for flood. This was excellent information. So many homes are underinsured today.
I hope these tips help you.
Any questions, feel free to e-mail me at Judy@AshurstandNiemeyer.com
Point Clear Woods is the pinnacle of Southern luxury, offering a serene, gated community where privacy and tranquility meet world-class golf. This exclusive neighborhood is known for its majestic oak trees and expansive lots, providing a peaceful haven for those seeking both beauty and serenity.
Residents of Point Clear Woods enjoy the unique privilege of having access to Lakewood Golf Club, one of the most prestigious golf courses in the area. While membership is not automatically included with property ownership, residents can apply for membership, which provides unlimited access to golf, tennis, swimming, and the club’s fitness facilities.
