I'm lost as to how the $75,000 cost and $125,000 improvement add up to $335,000.
If you have a casualty and your home is damaged, increase your basis by the amount you spend on repairs that restore the property to its pre-casualty condition. However, you must adjust your basis by any amount of insurance reimbursement you receive or expect to receive for casualty losses. Pub 523
You must decrease the basis again for the amount of the depreciation.