Publication 523 - Selling Your Home - 2003 Page 8
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31usually considered to own half of the community property.
9) First-time homebuyers credit (allowed to certain
When either spouse dies, the fair market value of the
first-time buyers of a home in the District of Colum-
community property generally becomes the basis of the
bia), and
entire property, including the part belonging to the surviv-
10) Energy conservation subsidy excluded from your
ing spouse. For this to apply, at least half the value of the
gross income because you received it (directly or
community property interest must be includible in the
indirectly) from a public utility after 1992 to buy or
decedent’s gross estate, whether or not the estate must file
install any energy conservation measure. An energy
a return.
conservation measure is an installation or modifica-
For more information about community property, see
tion that is primarily designed either to reduce con-
Publication 555, Community Property.
sumption of electricity or natural gas or to improve
the management of energy demand for a home.
Home received as trade. If you acquired your home as a
trade for other property, the basis of your home is generally
the fair market value of the other property at the time of the
Improvements. These add to the value of your home,
trade. If you traded one home for another, you have made
prolong its useful life, or adapt it to new uses. You add the
a sale and purchase. In that case, you may have realized a
cost of additions and other improvements to the basis of
gain. See Trading homes, earlier, for an example of figur-
your property.
ing the gain.
Examples. Putting a recreation room or another bath-
More information. For more information about basis, get
room in your unfinished basement, putting up a new fence,
Publication 551.
putting in new plumbing or wiring, putting on a new roof, or
paving your unpaved driveway are improvements. An ad-
Adjusted Basis
dition to your house, such as a new deck, a sunroom, or a
new garage, is also an improvement.
Adjusted basis is your basis increased or decreased by
The following chart lists some other examples of im-
certain amounts.
provements.
To figure your adjusted basis, you can use Worksheet 1,
shown later. Filled-in examples of that worksheet are in-
Additions
Heating & Air
cluded in Comprehensive Examples, later.
Bedroom
Conditioning
Bathroom
Heating system
Increases to basis. These include any:
Deck
Central air conditioning
Garage
Furnace
1) Additions and other improvements that have a useful
Porch
Duct work
life of more than 1 year,
Patio
Central humidifier
2) Special assessments for local improvements, and
Filtration system
Lawn & Grounds
3) Amounts you spent after a casualty to restore dam-
Landscaping
Plumbing
aged property.
Driveway
Septic system
Walkway
Water heater
Decreases to basis. These include any:
Fence
Soft water system
Retaining wall
Filtration system
1) Gain you postponed from the sale of a previous
Sprinkler system
home before May 7, 1997,
Swimming pool
Interior
Improvements
2) Deductible casualty losses,
Miscellaneous
Built-in appliances
3) Insurance payments you received or expect to re-
Storm windows, doors
Kitchen modernization
ceive for casualty losses,
New roof
Flooring
Central vacuum
Wall-to-wall carpeting
4) Payments you received for granting an easement or
Wiring upgrades
right-of-way,
Satellite dish
Insulation
5) Depreciation allowed or allowable if you used your
Security system
Attic
home for business or rental purposes,
Walls, floor
Pipes, ductwork
6) Residential energy credit (generally allowed from
1977 through 1987) claimed for the cost of energy
improvements that you added to the basis of your
Improvements no longer part of home. Your home’s
home,
adjusted basis does not include the cost of any improve-
ments that are no longer part of the home.
7) Adoption credit you claimed for improvements added
to the basis of your home,
Example. You put wall-to-wall carpeting in your home
8) Nontaxable payments from an adoption assistance
15 years ago. Later, you replaced that carpeting with new
program of your employer that you used for improve-
wall-to-wall carpeting. The cost of the old carpeting you
ments you added to the basis of your home,
replaced is no longer part of your home’s adjusted basis.
Page 8
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