How does one deduct Capital Improvement from primary residence such as New bathroom & New addition?

[HelenaC]

Unfortunately, on your personal residence, you do not deduct captial inprovements, although you might qualify for certain kinds of energy-related home improvements. More info

Home improvements may come into play when you sell your home because they're included in your home's adjusted cost basis. The bigger your basis, the smaller your capital gain, and that means less tax if your home sale profit exceeds $250,000 ($500,000 if you're filing jointly). Read more about the tax implications of home sales.

To qualify as a tax deduction, 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.

For most people, home improvements – even major ones – won't help their taxes after the home is sold. Nevertheless, it's always a good idea to keep track of what you paid in home improvements over the years, not just for potential tax savings but also to help justify your selling price.

Related Information:

• Can I claim energy-efficient appliances or energy-saving home improvements?
• Is the money I made from a home sale taxable?
• Are home repairs or maintenance costs deductible?
• How do I handle capital improvements and depreciation for my rental?