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Returning Member
posted Jul 10, 2020 3:33:56 PM

Can I not include the lender credit in the cost basis?

Can I not include the lender credit in the cost basis?

 

I sold my primary home and need to calculate and report capital gain on it.

 

Here is a list of some of the closing costs in the buyer's settlement statement when I purchased the house that I do not know how to treat/report.

 

  1. Loan application fee                        500
  2. Loan underwriting fee                     500
  3. Appraisal fee                                     500
  4. Lender credit                                    -1500

 

My questions are:

 

  1. In Publication 523, Selling Your Home, IRS directly indicated that item 3 (Appraisal fee) can not be included in the cost basis because it is a fee that connected with getting a mortgage loan. How about item 1 and 2 (Loan application and underwriting fees)? Can they be included in the cost basis? are they considered as charges connected with getting a mortgage loan as well and can't be included in the basis?
  2. Item 4 (lender credit) is a credit the lender offered to me to offset item 1-3. If item 1-3 can not be included in the basis, can I use item 4 (lender credit) to offset item 1-3 and not included it in the basis?

 

Thank you for your help!

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1 Replies
Level 15
Jul 10, 2020 4:41:13 PM

Since the credit offsets the fees you will NOT enter any of those in the program ... that will solve your issue.