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Home-improvement receipts add up to tax savings

Adjusted cost basis should reflect remodeling expenditures

DEAR BOB: We are currently engaged in a major remodel of our home. It is nearing completion. To preserve our sanity and our marriage, my wife and I decided to spend the summer away from the house living in our "weekend place" about 80 miles from my job. Each day, I commuted 160 miles round-trip. But it was worth it. We had a great family summer together and we moved back into our nearly finished home just before the kids started school. We spent about $85,000 on the remodel (borrowed on our home-equity line of credit). When we eventually sell our home, how will this affect our tax situation? – Bill W. DEAR BILL: Save your home improvement receipts. The total cost is a capital improvement, which should be added to your purchase price adjusted cost basis. Purchase Bob Bruss reports online. To illustrate, suppose you paid $200,000 for your home and you spent $85,000 on the remodel. Now your basis is $285,000. If you someday sell the house for, let's say, $400,000, then your capit...

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