@zomboo wrote:
Second, the costs of obtaining the original mortgage, appraisal, inspections, title fees and so on, are included in the basis for the property.
No. Basis never includes costs needed solely to obtain a mortgage. Some fees that may be customary or required even for cash customers (like an inspection or county transfer taxes and title fees) are allowed even if they are also part of getting a mortgage. Fees that are only connected with a mortgage (like appraisal, application fee, bank attorney fee) are never adjustments to basis, even for a first (purchase) mortgage.
See IRS publication 523, page 8. Also see publication 551, Basis of Property,
Settlement costs.
Your basis includes the settlement fees and closing costs for buying property. You can't include in your basis the fees and costs for getting a loan on property. A fee for buying property is a cost that must be paid even if you bought the property for cash.
