J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

29.6 Figuring Adjusted Basis

Adjusted basis in your home is cost basis (29.5) adjusted for items discussed below. Worksheet 29-2 may be used to figure adjusted basis.

Increases to cost basis include: improvements with a useful life of more than one year, special assessments for local improvements, and amounts spent after a casualty to restore damaged property.

Decreases to cost basis include: gain you postponed from the sale of a previous home before May 7, 1997, deductible casualty losses not covered by insurance, insurance payments you received or expect to receive for casualty losses, itemized deductions claimed for general sales taxes on the purchase of a houseboat or a mobile home, payments you received for granting an easement or right-of-way, depreciation allowed or allowable if you used your home for business or rental purposes, any allowable tax credit after 2005 for a home energy improvement (25.21) that increases the basis of the home, residential energy credit (generally allowed from 1977 through 1987) claimed for the cost of energy improvements added to the basis of your home, adoption credit you claimed for improvements added to the basis of your home, nontaxable payments from an adoption assistance program of your employer that you used for improvements added to the basis of your home, District of Columbia first-time homebuyers credit (allowed after August 4, 1997 to qualifying first-time homebuyers), and an energy conservation subsidy excluded from your gross income ...