@Critter-3 wrote:
If this is a rental you report on a Sch E then it is a deductible expense ... line 10 ... professional fees.
Would it be an adjustment to cost basis?
This is what realtor.com says:
“When you purchase a home in a condo building, you are buying the actual home and a share of the common elements of the building,” explains Ryan Hardy, a Realtor® with Gold Coast Realty in Chicago. Those common elements can include yards, garages, rec rooms, lobbies, or gyms.
But when you buy into a co-op, you don’t technically buy (or own) the property at all.
“You are purchasing shares of stock in a corporation or other legal entity that owns” the building, Hardy says. “You then are allowed to occupy a specific apartment in the building outlined in a proprietary lease that you receive with your stock certificate.”
If the co-op (ownership of a share in a corporation) is being converted to a condo (titled ownership of a specific property), that sounds like it should be added to the cost basis. (Certainly it would be added to the cost basis for a personal residence).
Then, if added to the cost basis, would it be depreciated? It's more than $2500 so doesn't fall into the safe harbor.
Yes, it is a legal expense, and legal expenses are normally expenses, but does the reason for the expense change the treatment?
