You would add the cost of home improvements to the cost basis of your home. The basis would be the initial purchase cost plus any improvements that you made and some items from the settlement statement.
To qualify as an increase in the adjusted basis when you sell, the home improvement must:
- Add materially to the value of your home; or
- Prolong your home's useful life significantly; or
- Adapt your home to new uses
Here are some examples of improvements:
- Remodels and room additions (including decks and porches)
- New or upgraded landscaping, irrigation, sprinkler system
- Hardscape such as pavement, block or retaining wall, patio
- Fencing
- Storm windows, doors
- New roof
- Upgraded wiring, plumbing, ductwork
- Central heating, AC, humidifier
- New furnace, water heater
- Filtration, soft-water, or septic system
- Built-in appliances
- New flooring or wall-to-wall carpeting
- Upgraded insulation
And some expenses that are listed on the settlement statement can be added to the basis. These include:
- Title fees
- real estate commissions
- documentary stamps
- credit report costs
- costs of an abstract
- transfer taxes
- home inspection
- flood certificate
- attorney fees, etc.
@tonywashingtons
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
