Which expense is NOT added to the original basis to determine the adjusted basis of a home?

When determining the adjusted basis of a home, it is important to understand what expenses are included in the calculation. The adjusted basis is essentially the original purchase price of the home plus any additional costs that enhance its value, prolong its useful life, or adapt it for new uses.

The total amount of a casualty loss is not added to the original basis because it represents a decrease in the value of the property rather than an enhancement. A casualty loss occurs when the home is damaged due to events such as natural disasters, theft, or vandalism, and the loss is recognized for tax purposes at the reduced value of the property after the casualty event.

In contrast, costs for improvements, assessments for local improvements, and restoration expenses related to casualties (minus any insurance reimbursements) are all expenses that contribute positively to the basis. Improvements are capital in nature and increase the value of the home, assessments are also seen as adding to the property’s value by improving public services, and restoration costs (net of reimbursement) reflect investment back into the home.

Thus, the correct option indicates an expense that effectively subtracts from the overall value of the property, rather than adding to it.