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Deductions & credits
@Kimilla wrote:
Well that's a bummer. I did improvements but not enough to cover the difference. Still looking at taxes on 42K. So to be clear none of the escrow costs to purchase in 88 can be deducted or any of the cost of the multiple refinances? I would only be able to guess at the costs. Why is the program asking for the escrow costs to sell it? Does that get deducted?
Thank you so much
"Escrow" costs are never deductible because money you place in escrow is still your money until it is spent on a tax or insurance bill. If you live in California, I am making a distinction between "closing escrow" (which would be closing costs) and putting money in for future expenses.
Some closing costs can be added to your adjusted cost basis, they are listed on page 8 here.
https://www.irs.gov/pub/irs-pdf/p523.pdf
You can include the similar costs at each refinance if you can prove you paid them.
Certain selling costs can be deducted from the selling price, such as the real estate commission. They are listed on line 2 of the worksheet on page 12 of the same publication. Repairs are not an adjustment because you are normally expected to keep your property in repair and repairs aren't deductible, but "staging" can be used as an "advertising expense" as long as you did not make changes to the house. (If staging included renting furniture, that's an adjustment, but if it included painting, that's not an adjustment.)
Note: if you received a 1099-S at the closing, you shouldn't actually adjust the selling price in Turbotax, because the IRS will be trying to match the 1099-S to your tax return. So you can include the selling costs as adjustments to increase your basis, it has the same effect in the end.