Tools · Life
Home cost basis tracker
Every capital improvement raises your cost basis and lowers the gain you are taxed on when you sell — but only if you can still prove it a decade later. The tax-free allowance has been frozen at $250,000 single and $500,000 joint since 1997 while house prices have not, so more sellers cross it every year. Log the work as you do it, and this shows your adjusted basis now and the taxable gain when you sell.
Questions people actually ask
- What is cost basis on a home, and why does it matter?
- Your basis is what the home cost you for tax purposes: the purchase price, plus certain buying costs, plus every capital improvement you make, minus any depreciation you claimed. When you sell, your gain is the sale proceeds minus that basis — so every improvement you can document is gain you are not taxed on. The catch is proof: the IRS expects records, and a kitchen you paid $40,000 for in 2014 counts for nothing if you cannot show it in 2034.
- How much home sale profit is tax free?
- Up to $250,000 of gain if you file single, $500,000 married filing jointly — the Section 121 exclusion. Those figures are statutory and have never been adjusted for inflation since 1997, which is why more sellers exceed them every year. You must have owned the home and lived in it as your main home for at least 24 months of the 5 years before the sale, and not have used the exclusion on another home in the prior 2 years.
- What counts as a capital improvement versus a repair?
- The IRS test is whether the work adds to the value of your home, prolongs its useful life, or adapts it to new uses. A new roof, an addition, central air, a kitchen remodel, new windows, landscaping — improvements. Repainting, fixing a leak, filling cracks, replacing broken hardware — maintenance, and not basis. One exception worth knowing: repair-type work done as part of an extensive remodel counts. Replacing one broken windowpane is a repair; replacing every window in a whole-house project is an improvement.
- What if I replaced an improvement I already logged?
- Take it out. Publication 523 counts only improvements still part of the home, so the 2008 roof you tore off in 2024 no longer adds to basis — only the new one does. Each entry here has an in-basis toggle for exactly this, which keeps the record honest rather than quietly inflating your basis with things that no longer exist.
- I had a home office or rented the place out — does that change things?
- Yes, in a way that surprises people. Depreciation you claimed (or could have claimed) after 6 May 1997 reduces your basis, and gain equal to that depreciation can never be excluded — it is unrecaptured Section 1250 gain, taxed at up to 25% even when the rest of your gain is fully covered. The tracker separates that slice out rather than folding it into a number that looks tax-free.
- What records should I keep, and for how long?
- Invoices, contracts and cancelled cheques for every improvement, kept until at least three years after you sell — the improvement from year one still matters in year twenty. That is genuinely hard, which is the point of a running log: this one holds the structured index and exports it as CSV to file alongside the receipts. Nothing you enter leaves your browser unless you sign in to sync it to your own account.
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