Enter the amount of gross proceed as it is on form 1099-S then add the deductions/expenses to the cost basis of the house.
Expenses that can be deducted:
- advertising
- appraisal fees
- attorney fees
- closing fees
- document preparation fees
- escrow fees
- mortgage satisfaction fees
- notary fees
- points paid by seller to obtain financing for buyer
- real estate broker's commission
- recording fees (if paid by the seller)
- costs of removing title clouds
- settlement fees
- title search fees, and
- transfer or stamp taxes charged by city, county, or state governments.
Most of these costs will be listed in the closing statement prepared by the escrow, bank or other financial institution, (or attorney, in some states) when you sell your house.
When selling your main home, if you owned and lived in the home for two of the five years before the sale, up to $250,000 of profit is tax-free.
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