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My home has a step down living room. It has carpet on it, but i want to make the floor level with the rest of the house it is about 2.5 inches step down. People keep tripping. I then either want to put new carpeting in or tile floor.

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Install a new plywood subfloor elevated on sleepers to match the existing adjacent floor surfaces.

A sleeper is a piece of dimensional lumber (such as a framing stud) ripped to the desired thickness.

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Especially if you are considering tile, gypcrete (floor leveler - lightweight self-levelling gypsum concrete) might be the best solution. If there's even a remote chance you might ever want in-floor radiant heating, place the PEX tubing for that before pouring the gypcrete (and depending on the floor there now, possibly place an inch of insulation and 1-1/2 inches of gypcrete) - you don't need to hook that up right away, but it's cheap and easy to do with the pour, expensive and tedious to try and do later.

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Unless a future radiant system is just installed in the living room, installing PEX now is a bit of premature optimization. Installing any future radiant heating in the living room should be designed, installed and tested as part of an integrated system with adjacent areas. – ben rudgers Aug 24 '14 at 14:09
And thus does the perfect become the enemy of the good.... – Ecnerwal Aug 24 '14 at 14:20

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