1. You can add cost of major improvements (structural changes such as building new home, complete floor change etc.)
2. Yes, ideally you should keep the evidence of improvement and income tax officer can ask for it at the time of scrutiny. You can also keep photos of before and after the improvements.
3. If you have not claimed any interest deduction, then you can add it in cost of acquisition but sometime income tax officer creates problem in it.
4. If you sale your old home before April 2018 and use that proceeds to pay off the loan, then your capital gain will be exempted to the extent it is used for paying off the loan.
Please feel free to call/ revert in case you need more clarity.
Thanks and regards,
CA CS B.Com