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Level 2
posted Oct 26, 2020 2:02:23 AM

How to deduct money given to buyer for repairs in settlement statement and purchase of home warranty for new buyer

I sold a rental property this summer with a 15 day closing schedule. Some of the windows were fogged and the buyer wanted the windows replaced. We offered money at closing and it's reflected in the seller's settlement statement. Where, in TurboTax, would I report that expense for a deduction?

 

Is the purchase of a home warranty for the buyer deductible and, if so, where would I report that cost in TurboTax?

0 3 925
3 Replies
Level 15
Oct 26, 2020 4:51:54 AM
Level 15
Oct 26, 2020 10:50:22 AM

It's either a reduction in the purchase price, or a cost of sale, the effect is the same in the end.  It reduces your selling price and therefore your capital gains.

Level 15
Oct 26, 2020 1:51:02 PM

For the seller it is added to the cost of sale.   Do not reduce the sales price as that could confuse the IRS ... they need to be able to match the 1099-S to the Sch D or form 4797. 

 

For the buyer it reduces the cost basis (purchase price).