What you spend on permanent home improvements, such as new windows, can be added into your home’s cost basis, or amount of money invested in a home, which reduces capital gains when it comes time to sell. Capital gains are determined by the difference in price from the time a home is purchased and the time it is sold, minus the cost of any permanent improvements.

It is worthwhile to save all receipts for permanent home improvements, they can be useful documentation when it comes to marketing your home when you sell.

Please don’t confuse a home improvement with a home repair. Replacing a roof is not a home improvement. You simply brought the same depreciating roof your home already had, back to its former value*. However, building a three-tiered deck to replace a single tier deck may be an “Improvement” since something of value was permanently added to the existing structure.

New or old, it will pay to maintain your home on a regular basis. Buyers see value in homes that are well maintained, and will pay top dollar even for homes that have not been ‘updated’ per se, but have nevertheless been properly maintained.