Certain closing costs at the time of purchase can be used to increase your basis. These are costs that you are required to pay whether you purchased in cash or financed, and might include required inspections, or county transfer taxes or deed recording fees. Similar costs of selling can be subtracted from your sales proceeds, including required fees, transfer taxes and the real estate commission.
You can also increase your basis by the cost of any permanent improvements that you made over the years, such as installing utilities. If you had to pay for county permits or inspection fees when you installed utilities, that can also be included.
You also increase your basis if you capitalized your carrying costs. (If you don’t know what that means, then you didn’t do it.) If you did capitalize your carrying costs, then you should have records to back it up.
But you don’t get an inflation adjustment or any other adjustment to cost basis, simply because you held the property for a long time.
