Did you know money spent on capital improvements can help lower your tax bill when you sell your home? Substantial remodeling, such as building a deck or installing new cabinets, increases the cost basis of your property. Tax rules let you add capital improvement expenses to the cost basis of your home. A higher cost basis will reduce your total profit—your capital gain—when you ultimately sell. As you pay tax on this profit, a lower gain will equal less tax. So, keep the receipts and save!