Home Improvement Records: Track Your Home's Cost Basis
That new roof, the kitchen remodel, the extension you saved for: each one can lower the tax you owe when you eventually sell your home, but only if you can prove what you spent. This guide explains how home improvement records build your cost basis, which projects count, and how to keep a simple log that still makes sense decades from now.
Key takeaways
- Your home's cost basis starts with the purchase price and grows when you make improvements that add value, prolong its life or adapt it to new uses.
- Ordinary repairs and maintenance generally do not add to cost basis, so it helps to label each project as you go.
- Keep invoices, contracts, permits and before and after photos for every improvement.
- In the US, the home sale exclusion is generous, but records still protect you if your gain is large, your circumstances change or the home becomes a rental.
The end of the year is when many home projects wrap up. The contractor sends a final invoice, the permit gets signed off and you are ready to forget about the whole thing. That is exactly the moment to file the paperwork properly, before the receipts end up in a kitchen drawer or an email folder you will never find again.
You might be thinking, "I'm not selling for years, so why bother?" That is the point. Improvement records only pay off at the sale, and the sale could be 15 or 25 years away. A few minutes per project now saves a lot of guessing later.
What cost basis means for your home
Your home's cost basis is, in simple terms, what you have invested in it. It generally starts with the purchase price plus certain buying costs. When you sell, your gain is roughly the sale price, minus selling costs, minus your basis. A higher basis means a smaller gain.
Improvements are the main way your basis grows while you own the home. If you spend money on a project that counts as an improvement, that amount generally gets added to your basis. Over many years, those additions can be substantial.
The US home sale exclusion
In the US, if you owned and used the home as your main home for 2 of the last 5 years before the sale, you can generally exclude up to $250,000 of gain, or up to $500,000 if you are married filing jointly. For many people that covers the whole gain. So why keep records?
- Values can rise a lot. If you stay in one place for decades, your gain could exceed the exclusion.
- Life changes. A move, a divorce or a period of renting the home out can affect whether and how much of the exclusion applies.
- Homes become rentals. If you later let the property, your basis records feed into depreciation and the eventual sale calculation.
- You cannot rebuild old receipts. If you need the numbers and do not have them, it is very hard to support them years later.
The UK picture
In the UK, Private Residence Relief usually exempts the gain on your main home, so many homeowners never pay capital gains tax on a sale. Records still matter for second homes, let property and situations where relief may not cover the whole period of ownership. If there is any chance a property will not be your only or main home throughout, keep improvement records as carefully as a US homeowner would.
Common mistake
Assuming the exclusion or relief means records do not matter. You only find out whether you need them at the point of sale, and by then the contractor may have closed, the bank may have purged old statements and your memory of the costs will be fuzzy at best.
Improvements vs repairs: which projects count
This distinction is the heart of the whole system. In the US, improvements that add value to your home, prolong its life or adapt it to new uses generally add to your cost basis. Ordinary repairs and maintenance, which keep the home in good working order, generally do not.
| Usually an improvement | Usually a repair or maintenance |
|---|---|
| A new roof | Replacing a few broken shingles |
| A kitchen remodel | Fixing a leaking tap or a cabinet hinge |
| An addition or extension | Patching a crack in a wall |
| Converting a garage into a home office | Repainting a room the same color |
Some projects sit in a gray zone, especially when small fixes happen alongside a bigger job. When you are unsure, log the project anyway, describe it clearly and let a tax professional decide at the time of sale. A record you do not use costs nothing; a missing record can cost you.
Pro tip
Ask contractors to split their invoices into clear line items, such as "new windows, living room" and "repair rotted sill, back door." Itemized invoices make it much easier to separate improvements from repairs years later.
What proof to keep for each project
For every improvement, aim to keep a small bundle of evidence:
- Invoices and receipts showing the date, the work done and the amount paid, including materials you bought yourself.
- Contracts and quotes describing the scope of the job.
- Permits and sign-offs from the local building authority, which also help when you sell and a buyer asks about the work.
- Proof of payment, such as a bank or card statement line, especially for large or cash-heavy jobs.
- Before and after photos, dated, showing what changed.
DIY projects count too. If you finish a basement yourself, keep receipts for materials and photos of the work, and ask a tax professional which costs can be included.
How to build your cost basis log
Your log is the summary that ties all the evidence together. Here is how to set one up.
- Record your starting point. Note the purchase date, purchase price and the buying costs shown on your closing or completion statement.
- List past projects. Walk through the house room by room and write down every significant project since you bought it.
- Hunt for old evidence. Search your email, bank statements and paper files for invoices and receipts for each project.
- Label each entry. Mark it as "improvement," "repair" or "unsure."
- Add a running total. Keep a column that adds each improvement to your starting basis.
- File the evidence. Save scans or photos in a folder named after the project, with the date first.
- Update after every project. Make it part of paying the final invoice: pay, scan, log.
Example
Imagine Marcus and Dana, who bought their home for $320,000 with $6,000 of qualifying buying costs. Over the years they added a new roof for $14,000, a kitchen remodel for $38,000 and a home office conversion for $12,000. Their adjusted basis is roughly $320,000 + $6,000 + $14,000 + $38,000 + $12,000 = $390,000. They also spent money on painting and minor repairs, which they logged but marked as maintenance. (These numbers are made up for illustration.)
A copyable home improvement log template
Copy these columns into a spreadsheet. The rows below are made-up examples.
| Date completed | Project | Type | Contractor or supplier | Amount | Permit | Evidence saved | Running basis |
|---|---|---|---|---|---|---|---|
| 2021-06-15 | New roof | Improvement | Example Roofing Co. | $14,000 | Yes | Invoice, contract, photos | $340,000 |
| 2024-09-30 | Kitchen remodel | Improvement | Example Builders | $38,000 | Yes | Contract, invoices, permit, photos | $378,000 |
| 2026-11-20 | Repaint hallway | Maintenance | Self | $250 | No | Receipt | $378,000 |
How long to keep home improvement records
For US taxpayers, the IRS says to keep records relating to property until the period of limitations expires for the year you dispose of it, which is generally 3 years after you file the return for that year. For a home, that means keeping improvement records for as long as you own it, and then for at least 3 years after filing the return for the year of sale.
In the UK, keep records for as long as you own the property and then for the period HMRC requires for the tax year of the sale. Check gov.uk if the property is not your main home.
If you sell and buy another home, start a fresh log for the new one, but keep the old file until its own retention period is over.
Common mistake
Keeping only paper copies in a box in the garage. Ink fades, damp gets in and boxes get lost in moves. Scan everything and keep backups in at least two places, then keep originals of important contracts and permits if you like.
Extra notes for landlords and home businesses
If you rent out all or part of a property, or use part of your home for business, improvement records do double duty. For a US rental, improvements are generally depreciated separately, and the depreciation affects your basis and your tax when you sell. Keep rental improvements in their own section of the log so you can see what relates to the rental use. In the UK, the rules for let property are different, so ask an accountant how to treat your projects.
This article is general information, not tax or legal advice. Rules on cost basis, exclusions and reliefs have many details, so speak with a qualified tax professional about your situation, and check IRS.gov or gov.uk for the current rules for 2026 and 2026/27.
Your home improvement records checklist
- Find your closing or completion statement and note your starting basis
- List every significant project since you bought the home
- Gather invoices, contracts, permits and payment proof for each one
- Take or find dated before and after photos
- Label each project as improvement, repair or unsure
- Build a log with a running basis total
- Scan everything and back it up in two places
- Add a "pay, scan, log" step to every future project
Frequently asked questions
Do energy upgrades like new windows or insulation count as improvements?
They often do, because they add value or prolong the home's life. Separate tax credits or grants may also exist and can affect how you record the cost, so log the project fully and ask a tax professional how to treat it.
What if I lost the receipts for an old project?
Look for bank or card statements, emails with the contractor and permit records from your local authority. Photos and a written description help too. Gather what you can and note how you arrived at the figure.
Do I need records if I am sure my gain will be under the exclusion?
It is still wise. Home values and life plans change, and the records are cheap to keep. If you never need them, you have lost a few minutes. If you do, they could save you real money.
Related reading
The bottom line
Every genuine improvement you make to your home can add to its cost basis, but only the ones you can prove will count. Keep invoices, contracts, permits and photos, label each project as an improvement or a repair, and keep a simple running log.
Start this weekend by listing past projects and finding the paperwork you already have. Then make "pay, scan, log" a habit, and your future self will thank you on the day you sell.
