Is a rental property seller credit considered a part of selling expenses when calculating gain or loss of a sale?

MagicLou · ‎March 19, 2020

I sold my rental townhome in 2019 and gave the buyer a seller credit of 3% ($6,600), as listed on the closing statement. The 1099S reported only the gross proceeds of the sale ($220,000). Can I include this amount as a selling expense, to be added to my cost basis, in calculating gain or loss? Thank you.

JulieS · ‎March 19, 2020

Yes, that is part of the cost of selling this property.

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MagicLou · ‎March 19, 2020

Thank you for your quick reply, Julie, but can you point me to the IRS publication or regulation (or other authoritative source) where this is specifically documented (just in case I have to convince someone else)? Thanks!

ColeenD3 · ‎March 20, 2020

While none of these is particularly authoritative, as a combination of sources, they support seller credits as basis adjustment.

Source 1

Source 2

Source 3

Is a rental property seller credit considered a part of selling expenses when calculating gain or loss of a sale?

Investors & landlords

Investors & landlords

Investors & landlords