The adjusted basis of a property that was sold is the original purchase price plus improvements that were made. The bigger your basis, the smaller your capital gain.
Is the money I made from a home sale taxable? (intuit.com)
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
Can I deduct home improvements on my tax return? (intuit.com)