Value of home improvement

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Stephen Yeoh
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Value of home improvement

Postby Stephen Yeoh » Wed Nov 08, 2017 10:00 pm

We've done some upgrades to our house. I'm trying to figure out what if any of the expense can be recovered as increased value of the house. For those of you with real estate experience, I'd appreciate some input.

We've replaced about 2800 sq ft of grass with artificial grass - what if anything does this add to the value of the house?
Upgraded the kitchen - replaced tiled counters with Ceasar Stone, new stainless sink, tiled backsplash, new island lights, replaced the island counter with a larger Ceasar Stone counter. Replaced and extended the bar counter with Ceasar Stone. Added lights above the bar counter.
Carpet upstairs replaced with hardwood throughout.
3 rooms downstairs - carpet replaced with matched travertine.
All interior incandescent lighting replaced with LED lighting.

Thank you.
Stephen

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Craig Naylor
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Re: Value of home improvement

Postby Craig Naylor » Fri Nov 10, 2017 9:45 am

Stephen Yeoh wrote:We've done some upgrades to our house. I'm trying to figure out what if any of the expense can be recovered as increased value of the house. For those of you with real estate experience, I'd appreciate some input.

We've replaced about 2800 sq ft of grass with artificial grass - what if anything does this add to the value of the house?
Upgraded the kitchen - replaced tiled counters with Ceasar Stone, new stainless sink, tiled backsplash, new island lights, replaced the island counter with a larger Ceasar Stone counter. Replaced and extended the bar counter with Ceasar Stone. Added lights above the bar counter.
Carpet upstairs replaced with hardwood throughout.
3 rooms downstairs - carpet replaced with matched travertine.
All interior incandescent lighting replaced with LED lighting.

Thank you.
Stephen


Hi Stephen, is this for you personal house, or a rental property?

If it's your personal home, or a rental that you have LIVED IN, for 3 of the last 5 years, it's most likely a mute question. For a couple, the first $500,000 of profit is capital gains free (for an individual $250k). Say you bought your house for $100,000, until and unless you sell it for more that $600,000 (excluding selling costs), your increased bases is immaterial.

If this is a rental property: The grass, carpet, and lights are all deductible as expenses the year they were installed. The Kitchen & Travertine need to be amortized for depreciation most likely using a 5yr S/L method. Upon sell, the amount depreciated will need re-captured. All profits are taxable at time of sale, so increased basses matters.

Specifically to your questions:
Artificial grass - You would have to be able to prove that the value of the home is actually worth more than with the grass it replaced. IMHO that would be tough to prove a buyer would pay more.
Kitchen - Yes, Technically, in an audit, only to the value it increased the value over the prior kitchen. Reality, the full cost as the auditor would never really be able to prove differenty.
Carpet - No, No thats a wear item
Travertine - Only to the amount greater than replacing with like kind flooring.
Lights - No, wear item.


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