Costs before that (during remodeling) are added to the basis.2.

Your basis is the value of the property at the time of inheritance.

It is my understanding that the new owner will have the house at the cost basis of my purchase price, for calculating capital gains taxes or depreciation.For gift tax purposes for you - FMV.For capital gain tax purposes for the recipient - your original basis/purchase price 

Basis is what you paid for capex.

My husband is on site all day every day as the GC and that helps.

The way it comes across is that his insurance payout escapes taxation, as long as it's below basis/purchase price. 

I listen to real estate rookie podcast everyday on my way to and from work.

Worrying everyday about getting fired for something out of your control?

Selling at FMV avoids the gift tax but provides your child with a higher tax basis, reducing their future capital gains liability.A better strategy for selling below FMV is to sell the house at FMV on an installment note, then forgive interest and principal annually up to the gift tax exclusion amount.

I know that interest on the acquisition loan can be included in the cost basis since it’s inventory.