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Your cost is increased by the improvements you made to the house. If the home you sold was your main home for 2 out of the last 5 years before you sold it then you do not have to report the sale.
If your costs (plus improvements) were more than your sale price (less costs to sale) you would not be allowed to use the loss against other income if you did use the home a a personal use property.
You are allowed to use the improvements to increase your cost.
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I forgot to mention that if you had to move form your home in TN because of your job in PA then that is an exception under the exclusion of gain form the home selling.
But if you had a loss then that is really not going to change things for you.
Did you need to add more information?