In course of owning a second home, it was necessary to file a lawsuit against the local homeowners association to settle a dispute about the survey lines and title to a local roadway crossing my property. I prevailed in that suit; the legal fees I incurred were substantial. May I add those fees to my basis in the property when calculating a gain or loss upon sale? Note that IRS guidance in Pub. 551 gives an example of legal fees incurred to "clear a title." My situation, arguably, does deal with "title" to the roadway. Adding my costs to original basis will substantially eliminate any gain, thus an important consideration.
