Can I add a new roof cost to my house's base value if sellers install it before closing?

Great question about home improvement costs and your tax basis! When sellers make repairs before closing, those costs are already factored into your purchase price - you're essentially buying a house with a new roof at the agreed price. Your "basis" in the home (what the IRS considers your cost) is what you pay at closing plus certain closing costs. However, this is still good news for you tax-wise. When you eventually sell the home, you'll calculate your capital gain by subtracting your basis from your selling price. Since the roof is new, you won't need to replace it anytime soon, which saves you from having to pay for this major expense yourself and then adding it to your basis later. If you live in the home as your primary residence for at least 2 of the 5 years before selling, you'll qualify for the Section 121 exclusion, which lets you exclude up to $250K in gains ($500K for married couples) from your taxable income.

After dealing with a similar home purchase situation, I found this amazing service called taxr.ai (https://taxr.ai) that really helped me understand the tax implications of home improvements and basis calculations. I was confused about what counts as capital improvements vs repairs and how to track everything properly for future tax benefits. Their system analyzed my closing documents and helped me create a proper record of my starting basis in the home, plus it gave me a system for tracking all future improvements. The best part was they explained exactly how the Section 121 exclusion would apply in my specific situation.

I just wanted to follow up about my experience with taxr.ai after seeing it mentioned here. I was skeptical at first because I've tried other tax services that were disappointing, but this was actually really helpful for my situation. I uploaded my closing documents and they helped me establish my correct tax basis including the relevant closing costs. They also gave me a simple system for tracking home improvements going forward - which I needed since I'm planning several projects. What surprised me was their explanation of how repair costs vs. improvements are treated differently for tax purposes. Saved me from making some classification mistakes that could have caused problems if I were audited later.

If you're dealing with lenders and insurance companies requiring roof repairs before closing, you might run into communication problems with the IRS down the road too. I spent WEEKS trying to call the IRS about how to handle a similar situation with documenting home improvements for my basis. I eventually used Claimyr (https://claimyr.com) and it was a game changer. They got me connected to an actual IRS representative in about 15 minutes when I had been trying for days. They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c. The IRS agent I spoke with gave me the exact guidance I needed about documenting home improvements and how to track my basis properly.

I have to admit I was completely wrong about Claimyr. After dismissing it as probably a scam, I was desperate to resolve a question about my home sale basis calculation before filing my taxes. Decided to try it as a last resort and was shocked when I was actually connected to the IRS in under 20 minutes. The IRS agent I spoke with walked me through exactly how to document my home improvement expenses and which forms I needed to file. They even helped me understand how to calculate depreciation recapture on the portion of my home I'd been using for business. Saved me from making a costly mistake on my taxes and potentially facing an audit.

Everyone's focused on the tax basis question, but I think you're missing something important here. If you expect the house to appreciate $350k+ over your purchase price, you'll exceed the $250k capital gains exclusion when you sell (assuming you're single). Even if the roof cost isn't added to your basis, you should be keeping meticulous records of EVERY improvement you make to the home during ownership. Create a spreadsheet now and save all receipts for improvements (not repairs). Things like kitchen remodels, bathroom upgrades, finishing a basement, adding a deck, replacing windows, etc. all count toward your basis and will reduce your taxable gain when you eventually sell.

Has anyone here ever actually been audited on home improvement basis calculations? I've been adding stuff to my basis for years and wonder if the IRS really checks this stuff or if I'm being too careful?

This is really valuable information about the audit risk! I'm curious about the documentation requirements - when you say your parents couldn't prove some of the work, was it because they didn't have receipts, or were there other documentation issues? I'm trying to figure out the best way to organize everything from day one. Also, did they have any luck with getting credit for improvements where they had receipts but maybe not before/after photos? I'm wondering if contractor invoices alone are sufficient or if visual documentation is really necessary for every project.