Small Business Taxes & Management


Home Improvements -- Basis Additions


Small Business Taxes & ManagementTM--Copyright 2014, A/N Group, Inc.


Home Improvements

The law currently allows you to exclude the first $250,000 ($500,000 if married filling joint) of gain on the sale of your principal residence. That has lured many homeowners into a security. They think there's no need to track improvements that add to the cost basis of their home. But that $500,000 exclusion will disappear if your spouse dies and you don't remarry (there's a 2-year grace period on the $500,000 exclusion). Or your gain could exceed the limit. While the housing market still hasn't recovered to the pre-crash levels, many homeowners have gains in excess of $500,000. Finally, the checklist below applies to all residential properties--your principal residence, your vacation home (that doesn't qualify for an exclusion) and any home you hold for investment.

The list below is a checklist of the items that qualify as improvements to your basis. Any particularly item could have multiple entries. For example, garage improvements may be made over a number of years--sheetrocking and wiring one year, heavy duty shelving the next, etc. The best approach is to create your own spreadsheet.

Use the list below for the headings and reminders. We've tried to make the list as comprehensive as possible, but it's not all inclusive.

List different improvements separately with the date and amount. Include a description so you can identify the work done with the receipts. The more detail the better. And be sure to keep the receipts.

Take out any improvements that are retired. For example, you have listed the tile in the bath. Two years later your spouse decides it's ugly and you rip it up and replace it with new tile. Take out the old and put in the new.

Major Additions

___Deck, porch
___Storage shed
___Swimming pool


Interior Upgrades

___Wall-to-wall carpeting
___Built-in appliances
___Wall addition/removal
___Windows (replacement or added)
___Exterior doors (replacement or added)
___Interior doors
___Central vacuum
___Garage upgrades (floor, sheetrock, wiring)
___Insulation (attic, basement, crawl space, walls, pipes and ducts)
___Wall/floor/countertop tile/granite/etc. upgrade


Heating, Ventilation, Air Conditioning

___Heating system
___Oil tank
___Central air conditioning
___Central humidifier
___Central air filtration
___Duct work
___Additional heating zones
___Thermostat upgrades/internet control
___Passive solar hot water



___Retaining wall
___Landscaping (new trees, shrubs)
___Exterior lighting



___Wiring additions/updates
___Lighting fixtures (permanent)
___Electronic/wireless controls
___Standby generator (permanent)
___Solar panels



___Pipe upgrade/replacement
___Water heater
___Well, pump
___Sewer hookup
___Public water hookup
___Fixture upgrades (toilet, sink, tub, etc.)
___Filtration system
___Water softening
___Cesspool, septic tank addition


Copyright 2014 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536

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--Last Update 10/28/14