I would tear down and build a new house instead of doing that Frankenstein house thing.
It makes sense financially to make massive improvements if you’re already at or beyond the $500,000 married limit for avoiding capital gains taxes. I think the majority of million-dollar+ homeowners are already there or close, given the pandemic bump of like +30% over the last 3 years.
Basically if you bought at $500,000 10 years ago and your house is worth a million now, you’re going to be taxed 20% on all further appreciation upon sale, unless you put more improvements into the house. Might as well sink another $500k into improvements with average 50% ROI, so your house can appreciate another $250k over time without being taxed on it, while you enjoy the new bullshit in your house. The other option to game the tax system is buying a new house and having to move, and taking on a mortgage that’s much higher interest than the 2% you refinanced at a few years ago.