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Although there is a $250,000 gain exclusion for those who qualify, it's probably a good idea to track costs beyond original purchase price to track a more accurate cost basis. I've read that expenses for improvements that add value to the property, prolong its useful life can get added to cost basis, such as adding a room, installing a new roof, or renovating the kitchen. Routine repairs and maintenance, however, are not considered capital improvements. Can I include the costs incurred for adding landscaping (stone block wall, rock, lights, raised garden beds) to the cost basis of my house?

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You included a bunch of items in your question:

I've read that expenses for improvements that add value to the property, prolong its useful life can get added to cost basis, such as adding a room, installing a new roof, or renovating the kitchen.

To determine what can be included you will want to consult IRS Publication 523 (2022), Selling Your Home

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 following chart lists some examples of improvements. The chart is extensive, and does include a roof.

There are exceptions:

Examples of improvements you CAN’T include in your basis.

You can’t include:

  • Any costs of repairs or maintenance that are necessary to keep your home in good condition but don’t add to its value or prolong its life. Examples include painting (interior or exterior), fixing leaks, filling holes or cracks, or replacing broken hardware.

  • Any costs of any improvements that are no longer part of your home (for example, wall-to-wall carpeting that you installed but later replaced).

  • Any costs of any improvements with a life expectancy, when installed, of less than 1 year.

That would mean if you lived in the house long enough you could only include the last time you updated that item.

They do allow you to include some non-allowable costs if they are done as part of a bigger project. Paint isn't something you can normally include, except when you are doing it as part of a allowable big project.

Exception.

The entire job is considered an improvement if items that would otherwise be considered repairs are done as part of an extensive remodeling or restoration of your home. For example, 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. See Worksheet 2, line 5.

and something else I hadn't remembered:

Energy credits and subsidies.

If you included in your basis the cost of any energy-related improvements (such as a solar energy system), and you received any tax credits or subsidies related to those improvements, you must subtract those credits or subsidies from your total basis.

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    Thank you for the detailed answer and the link to the IRS Publication for selling your house, I certainly appreciate the help. Also, I didn't realize the energy credits need to be subtracted from total basis, that's good to keep in mind. Given that some folks may stay in their house for one or two decades, it sounds like keep tax records, even beyond the 3-6 year potential audit window is a good idea since info from a tax return many years ago might be needed upon the sale of why house. Aug 12, 2023 at 19:14
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    @DantheMan2015 any credits or reimbursements should be subtracted from the basis.
    – littleadv
    Aug 12, 2023 at 20:22

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