@zenmster wrote:
What do you mean "added to the cost basis"? Can you give an example with #s?
Suppose you paid $100,000 for the home.
Then, you replaced the furnace for $5,000.
Your adjusted cost basis is now $105,000.
You sell for $225,000. You have $30,000 of selling expenses.
Your net selling price is $195,000 and your cost basis is $105,000, so you have a capital gain of $90,000.
If you received a 1099-S at the closing, it may be necessary to report the selling price as $225,000, so it matches IRS records. You would then include the selling expenses in the cost basis, so the capital gains comes out the same.
If this was your personal home for at least the last 2 years, you may be able to exclude the first $250,000 of capital gains from any tax, or $500,000 if you are married filing jointly.
You can review this all here.
https://www.irs.gov/pub/irs-pdf/p523.pdf
