Adding resale value—the bigger the better.
The improvements that will help you sell your home later are bigger jobs such as remodeling the kitchen or bathroom, or adding an office or a deck. Jobs that are primarily decorative—painting, new carpet, or a new roof—help make your home more attractive to buyers when you want to resell, but will not necessarily increase the value of the property.

Tax perks from capital improvements.
As long as the improvements you make qualify as "capital improvements" (things you do that permanently enhance your home's value and stretch its life), the IRS lets you deduct those costs from taxes when you resell your home, assuming you itemize your return. Capital improvements would include adding an attic bedroom, building a wall or installing a pool. Note: You can't deduct money you spend on normal home "maintenance"—things you have to do every so often, like painting an existing room, fixing the dishwasher, or paying the kid down the street to trim the hedges.

Over improvement—too much of a good thing.
There can be a point of diminishing returns with home improvement. If you enhance your home way beyond the value of other houses in your neighborhood, you won't recover the value of those improvements when you resell. That's because people who can afford the highest priced house on your street generally will spend the same money to live on an even nicer street. Of course, if you plan to stay in your home indefinitely, go ahead and improve away!