You are mixing up terms inconsistently.
- ONLY in the case of a house that qualifies as a personal residence, a married couple can "exclude" (reduce the taxable proceeds received) $500,000 [single person $250,000]. That only applies to a personal residence and not any other owned house, residence or other assets. Such an exclusion is beneficial in that it reduces the capital gains that are taxable.
- In the case of any asset, applicable improvements made after purchase are added to the cost basis and thus reduce the capital gains liability. In the specific case of a house, and which house is not a personal residence, the same matter of increasing the cost basis applies for costs undertaken for improving or expanding the house. Note that costs such as normal maintenance are not improvements. Note also that the "exclusion" is not available for a house which is not a personal residence.
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Your last posting which seems to have not received a response:
can i exclude capital improvements upon sale of a house that is not my primary residence
There is a 500k$ exclusion to capital gains on our primary residence. Can we also exclude capital improvements? If so, is there a limit to the capital improvement exclusion?
What about a house that is NOT our primary residence. I know there is no basic exclusion but can we exclude capital improvements?
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