Planning to make improvements to your home? You can include them in the cost basis of your house and thus reduce your capital gains tax if you ever sell ( be sure to keep the receipts). If you're making repairs, however, there is no tax benefit.
What's the difference?
According to the IRS, an improvement "adds to the value of your home or prolongs its life," whereas a repair keeps it in "ordinary, efficient operating condition." There is a fine line between the two, but here are some general guidelines:
Improvements:
- Wallpapering
- Installing tile floors
- Replacing lighting fixtures
- Paving your driveway
- Adding insulation
- Installing a water heater
- Installing metal roof
- Painting your home
- Refinishing wood floors
- Replacing broken window panes
- Sealing your driveway
- Replacing gutters
- Installing new pipes
- Repairs to asphalt roof
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