@jennifervphan wrote:
Can you help me figure out what items I can include in the depreciation amount? Are the rows highlighted in green correct? $568,414.47? I can delete this image after.
The kinds of closing costs that are allowable as adjustments to basis are the costs you would have been required to pay even if you had paid in cash and not gotten a mortgage. This can include a survey, county stamp tax for transferring the property, county fee for recording the deed, and so on. They are listed in publication 523 on page 8.
https://www.irs.gov/pub/irs-pdf/p523.pdf
More details about adjustments to basis are in publication 551.
https://www.irs.gov/forms-pubs/about-publication-551
As best I can tell:
Bank fees to NFM Lending and the Lender's title insurance are not allowed, because those costs are associated with the mortgage and you would not have paid them if you paid cash for the property. I think the charge plus sales tax for the closing agent are probably allowable as "Legal fees (including fees for the title search and preparing the sales contract and deed)," as shown in Publication 523. (Is there a second page to your closing statement? Most counties charge some kind of transfer tax and recording fee. Did you pay for a survey? Did you pay for a title search?)
Furthermore, you must reduce your purchase price by the seller paid closing costs. You didn't really buy the property for $565,000, you bought it for $548,050. That's like checking out a $20 bottle of wine at the liquor store and the clerk hands you a $2 rebate, your cost is really $18.
