That brings up an edge-of-the-envelope question for me. If I “upgrade” my refrigerator to a built-in/walk-in refrigerator, would that count as a capital improvement? If so, would the improvement be the cost of the installation less the cost of the prior fridge, or would it be the whole cost of the installation (eliding the likelihood that the cost even of a Sub Zero is likely to be chump change compared to the upgrade)?
Generally speaking, and I’m hedging my answer because there are many gray areas in the determination of capital improvement and what costs are included, it would be the entire cost of the project. I am assuming that this is a replacement/improvement of a free-standing appliance refrigerator. The replaced appliance was not part of the original basis of the home.
In contrast, if you were to replace and upgrade your heating system, you would increase your basis by the cost of the replacement project (furnace and installation) but reduce the basis by the basis of the replaced system.
All of this is discussed in Pub. 523 referenced earlier.
Ira