Which Home Improvements May Increase Tax Basis?
By JC Pacific Corp Published 2026-09-01 Last professionally reviewed: September 2026
A qualifying capital improvement may increase a property's adjusted basis when it adds value, prolongs useful life, or adapts the property to a new use. Ordinary repairs and maintenance generally receive different tax treatment.
What may count as an improvement?
Depending on the facts, examples may include:
- Adding a room
- Constructing an ADU
- Replacing an entire roof
- Installing central air conditioning
- Major kitchen or bathroom renovations
- Installing permanent accessibility improvements
- Replacing major plumbing or electrical systems
- Certain landscaping or exterior improvements
An item's eligibility can depend on what was done, why, and whether it still benefits the property when sold.
What records should be kept?
Retain:
- Contracts
- Paid invoices
- Permits
- Before-and-after photographs
- Bank or credit-card records
- Plans
- Material receipts
- Contractor information
- Insurance records
Frequently Asked Questions
Does painting increase basis?
Routine painting is often considered maintenance, although treatment may differ when part of a larger qualifying improvement project.
Does my own labor increase basis?
The value of an owner's personal labor is generally not added as though it were a paid expense.
Do staging expenses increase basis?
Staging and selling expenses require separate analysis.
Educational information
Examples are educational and do not determine the treatment of a specific expense.
Organize improvements by project and ask a tax professional which documented costs affect basis.
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A note on legal advice: These guides provide general, educational information about California real estate practice. They are not legal advice and do not create an attorney-client relationship. Mortgage information is general education, not individualized lending, tax or legal guidance. For advice about your specific offer, contract, closing or financing, consult a qualified California real estate attorney and a qualified mortgage professional.
A note on these tax guides: The California home-sale tax articles provide general educational information and have been reviewed by a qualified California tax professional. They are not tax, legal, accounting, financial, or insurance advice, and JC Pacific Corp and its real estate professionals are not tax advisers. Sale price, equity, net proceeds, taxable gain, withholding, and final tax are different numbers, and withholding is a collection mechanism, not a determination of final tax liability. Verify current IRS and California Franchise Tax Board forms and rules with a qualified tax professional before making decisions.