Deductions & credits

Any home improvement or selling costs that can be deducted are just added to the cost basis or subtracted from the sales price used to determine the gain on the sale. There is no place to enter them on your tax return. Keep a record of them and how they were used to adjust the cost basis or reduce the selling price. If you received a 1099-S, it is best to adjust the basis rather than the selling price so that the selling price matches what the IRS receives on the 1099-S.

Here is an article that describes what is deductible and can be added to the basis or subtracted from the selling price: http://www.nolo.com/legal-encyclopedia/when-home-sellers-can-reduce-capital-gains-tax-using-expenses...

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