Please let me provide some clarification here, while assisting you.
There is a section in TT for entering escrow fees for cost basis adjustments.
There is no section in TT for "ESCROW" fees. Money placed in escrow is not deductible on any tax return. Money you put in escrow is "your" money, and remains your money until such time the escrow administrator makes a withdrawal from that escrow account, to pay an expense you are legally obligated to pay. An example of such an expense would be property taxes. That expense would then be deductible on your tax return in the tax year it was actually paid. It does not matter what tax year the withdrawal is used to pay *for*.
Next, there are two types of expenses you will deal with, when it comes to the initial setup of rental property in TurboTax.
- Loan acquisition costs -- these are expenses you pay that are associated with your acquisition of the loan. These expenses are amortized (not captitalzed) and deducted (not depreciated) over the life of the loan. As an example, if the lender required a survey of the property as part of the loan approval process, and "you" paid for that survey, then your survey fee is a loan acquisition cost.
- Property acquisiton costs -- These are expenses associated with your acquisition of the property. These expenses are added to your cost basis. Depending on your specific and explicit scenario, the program does a pretty descent job of adding these expenses to the cost basis for you. An example would be the title transfer fees paid at the courthouse to take the seller's name of the property deed, and put your name on that deed.
Now to your questions.
I got almost $3000 in credit from my agent and also $3200 in lender credit (for getting mortgage with bank). I am assuming I need to add these up that decrease the cost basis?
Your assumptions may be right or wrong. It depends on how the "bottom line" was achieved on your closing statement. It is not typical for your closing statement will show commission credits and have them figured in your costs already. It's actually more common for the agent that gave you the credit, to send you a tax reporting document such as a 1099-MISC, reporting that "pay back" to you.
For example, the HUD-1 closing statement I received (sample at https://www.hud.gov/sites/documents/1.PDF) when I initially purchased my property shows the total commission paid I paid on line 704 with the amount I paid in the "paid from borrower's funds at settlement" column. Then line 704 is labeled "commission rebate" and there's an amount in my column. Then line 705 is labeled "commission retained" is the amount shown there is what I 'actually" paid the RE agent. It's that amount on line 705 that is included in the settlement charges to borrower on line 103. Not the amount I was actually initially charged. Therefore in my specific case, I could not subtract the rebate from my cost basis, since that rebate was already shown and included on the closing statement.
So it may be necessary for you to "work the math" through the closing statement, to see if the credit was already included in your "bottom line" settlement charges, or not. Typically, the bank will include their credits. But the real estate agent representing you may not, since they have no say in the completion of the final closing statement.
