Please see Publication 523 page 8
Construction. If you contracted to have your house built on the land you own, your basis is:
- The cost of the land, plus
- The amount it cost you to complete the house, including:
- The cost of labor and materials,
- Any amounts paid to a contractor,
- Any architect's fees,
- Building permit charges,
- Utility meter and connection charges, and
- Legal fees
On page 9 it also says:
Improvements, Improvements add to the value of your home, prolong its useful life, or adapt it to new uses. You add the cost of additions and improvements to the basis of your property. The building permit charge is not excluded.
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