What are some examples of home additions and permanent home improvements?

Depending on your situation, you are eligible to include the cost of certain home additions, permanent home improvements, or repairs done as part of a larger project in the basis of your home. Generally, the basis in your home subtracted from your sales price will determine the gain on the sale of your home. So, a higher basis will result in a smaller gain and potentially less taxes.

Following are some examples of home additions and permanent home improvements you may be able to include in the basis of your home:

Home Additions

• Bedroom
• Bathroom
• Deck
• Garage
• Porch
• Patio

Permanent Home Improvements
Lawn and Grounds:

• Landscaping
• Driveway
• Walkway
• Fence
• Retaining wall
• Swimming pool

Exterior:

• Storm windows/doors
• New roof
• New siding
• Satellite dish

Insulation:

• Attic
• Walls
• Floors
• Pipes and duct work

Systems:

• Heating system
• Central air conditioning
• Furnace
• Duct work
• Central humidifier
• Central vacuum
• Air/water filtration systems
• Wiring
• Security systems
• Lawn sprinkler system

Plumbing:

• Septic system
• Water heater
• Soft water system
• Filtration system

Interior:

• Built-in appliances
• Kitchen modernization
• Flooring
• Wall-to-wall carpeting
• Fireplace

For more information about what you can and can't include in the basis of your home, see IRS Publication 523 .