Home Renovation & Basis Adjustments

Assuming you are renovating your personal residence and not a rental property:

1, Yes, if the renovation is an expansion or improvement in functionality and not simply a repair. For instance, if you add a room, yes. if you repaint an existing room, no. If you tear out and replace the walls of an existing room due to flood damage, yes.

1. Probably not, unless you could demonstrate that the new windows were significantly better than the old windows, when they were in good operating condition.
2. No, unless you were replacing the floor because it was unusable.

4-5. Built-ins, yes, because they are permanently attached to the structure. Free-standing, no, because you "could" take them with you without affecting the structure of the building.

6-7. No.

8-10. No, except if part of a major renovation such as building an addition to the house. Even then, window treatments would be a stretch.

1. New installation, yes. Replacement sensors, no.

12-13. If the scope of the renovations rise to the level where they can be capitalized, then these fees are part of the cost basis. Otherwise they're just repair costs.

14-15. No.

Ira Smilovitz

Why wouldn't NEW (not replacement) outlets and ceiling or wall fixtures be added to the basis? Aren't they improvements to the structure, even though relatively small?

Bob Sandler

New installation could be an addition to basis, but is it really worth keeping track of the cost when you're talking about less than 1% of the total cost basis?

Ira Smilovitz

yes.