According to the IRS, Publication 551, Basis of Assets. Please see pages 4 and 5.
Increase the basis of any property by all items properly added to a capital account. These include the cost of any improvements having a useful life of more than 1 year. Rehabilitation expenses also increase basis. However, you must subtract any rehabilitation credit allowed for these expenses before you add them to your basis.
Increases to Basis
Capital improvements: Putting an addition on your home Replacing an entire roof Paving your driveway Installing central air conditioning Rewiring your home Exclusion from income of subsidies for energy conservation measures Casualty or theft loss deductions and insurance reimbursements Certain vehicle credits Assessments for local improvements: Water connections Sidewalks Roads Legal fees: Cost of defending and perfecting a title, zoning costs.
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