I am rehabbing a house and need to know what expenses be assigned directly
to the improvements for figuring profit on the property. My items in
heating fuel for working in the house in cold weather
utilities (after the furnace was repaired)
supplies;screwdriver bits, saw blades, etc.
None of them. Utilities and maintenance costs do not add value to the home.
If you had replaced the furnace with a new furnace, that would be
considered a capital improvement that would prolong the useful life of the
house. In addition, look for improvements that enhance the property's
overall value (e.g., solar panels, building an additional room, high
efficiency windows). Merely paying for expected repairs to keep the house
in the condition it was purchased are not improvements.
Some areas are tricky. For example, replacing a few worn roof shingles is
considered repairs. However, replacing a good portion or all of the roof
shingles are considered improvements. Regular landscaping is considered
maintenance, but major landscaping can add value to the home.