When you sell you get a break. The difference between your cost basic and your sales price is your capital gain for the property. If your home has increased in value because of the market and not improvements, a major improvement may offset a capital gains tax bill. Being able to deduct the improvement costs from the cost basis may be what you need to get the amount under the exclusion amount. But be careful not to overbuild for your neighborhood and decrease your chances of a sale.
Some improvements can also trigger an increase in property taxes so watch out.
You can check with your local state tax department to see which home improvements may trigger an increase. This is a lot easier than calculating a capital gain. Most property taxes are based on square footage. So be careful when adding a room or any new livable space.