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Get your taxes done using TurboTax
No, that is not correct. Your sales price is $500. Out of that $500, $400 was for the building and $100 was for the land.
Added to the basis are the major improvements, like the counter replacement. You have the choice of adding the appliance or treating it separately. The repairs and designer are not deductible, nor are they added to the basis.
Your closing costs on your HUD are prorated. If the total was $50, then $40 goes to the house and $10 is applied to the land. since land is not depreciable, it has to be treated separately.
The following items are some of the settlement fees or closing costs you can include in the basis of your property.
• Abstract fees (abstract of title fees).
• Charges for installing utility services.
• Legal fees (including title search and preparation of the sales contract and deed).
• Recording fees.
• Surveys.
• Transfer taxes. Intangible taxes.
• Owner's title insurance.
• Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions.