Expenses you must pay to obtain title to your home are added to the home's tax basis. This means the expenses will increase the value of the home for tax purposes, and reduce the amount of any taxable profit you realize when you sell the home.
These expenses include:
- legal fees to obtain title to the home
- title search fees
- title insurance
- title recording fees
- transfer taxes, and
- survey fees.
You can also add to basis any expenses of the seller that you agree to pay, such as real estate broker commissions.
The remaining costs you incur to purchase a home are neither deductible nor eligible to be added to your home's basis. As far as taxes go, they are useless. These costs include all the costs you incur to obtain a home loan--for example:
- appraisal fees
- mortgage broker's commissions
- pest inspection fees
- credit report fees
- loan fees (not points)
- mortgage insurance premiums
- commitment fees.
You also can't deduct or add to your home's tax basis hazard insurance premiums, homeowners' association fees, or utility fees.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
