Claiming prior refi costs at sale? Cost basis starts when?

[christine1]

HI! 

Over the last 25 years I refinanced a rental twice.  I never claimed those refi costs.  Can they be added to the cost basis now at sale? 

And..

Should my cost basis start from when I converted this property to a rental?  Not including the previous 17 years when I resided there? 

Thanks, 
C.

[ReneV4 · Accepted solution]

It depends. Only certain costs associated with refinancing can be added to your cost basis.

For example, costs like title insurance, survey fees, recording fees, and appraisal fees can increase your home's cost basis.

To determine these costs, review your original closing documents for each refinance.

And...

No. Your cost basis does not start from when you converted this property to a rental. 

To determine the cost basis of a rental conversion (converting a primary home to a rental), use the lesser of the property’s adjusted cost basis or its fair market value (FMV) on the date of conversion. 

Calculate Adjusted Basis:

• Original Purchase Price: The amount paid to acquire the property
• Plus Acquisition Expenses: Closing costs, title fees, and commissions paid upon purchase
• Plus Improvements: The cost of permanent improvements made before conversion (examples are: new roof, renovations, not normal repairs)
• Minus Depreciation: Any depreciation allowed, such as for a home office, prior to conversion

To determine the FMV at time of conversion, you can use appraisals or comparable sales.

[christine1]

Thank you. 
I think I actually have the different closing documents in the drawer I never open. 
The cost basis from 1985 is going to hurt me.  

I appreciate your time! 

Christine