Add closing cost both while buying and selling the rental property to basis?

[hdurina84]

Bought a rental unit 3 years ago. Sold this year.
To get Basis-- should I do :

Purchase price   Closing costs while buying   Closing costs while selling.

or just:

Purchase price   closing costs while selling.
Thanks

[Mike9241]

your closing cost at purchase should have been included in the tax basis and depreciated.  closing costs at selling are a selling expense.

if you have not depreciated the applicable purchase closing costs, see a tax pro. this needs to be corrected. the IRS position is that if you didn't depreciate the applicable closing costs upon purchase, you have to compute your accumulated depreciated as if you did and you can't take a deduction for all the missed depreciation without filing form 3115. not a chore for most taxpayers.

not all closing costs affect basis or are selling expenses. the following list is not all-inclusive:

real estate taxes, any interest charged or credited, homeowners association fees, insurance are reported on schedule E rental income/expenses.

[hdurina84]

Thanks

1. Looks Like the CPA only depreciated the purchase price. Not the purchase closing costs 

2. So I cant add the closing costs while selling my rental property to the basis?

If not,  how can I take advantage of the closing costs at selling?

[Anonymous_]

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@hdurina84 wrote:

2. So I cant add the closing costs while selling my rental property to the basis?

---

As @Mike9241 indicated, you need a tax professional.

The closing costs should have been added to the basis at the time of purchase and depreciated. If they were not, you most likely need to file a 3115, for which a tax professional would be highly recommended.

[Mike9241]

closing costs on selling don't add to basis but as selling costs they reduce your gain. the same effect as if you added to basis.

[Anonymous_]

I believe @hdurina84 was inquiring about closing costs when the property was purchased.

[Mike9241]

@Anonymous_ 

here is the heading for the thread.

Add closing cost both while buying and selling the rental property to basis?

[Anonymous_]

Correct, but then @hdurina84 stated in a subsequent post:

"1. Looks Like the CPA only depreciated the purchase price. Not the purchase closing costs " 

[hdurina84]

Thank you both

For purchase closing costs will fill the new form

For selling closing costs , Ill see how the can reduce my overall gain.