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becky_jay
New Member

What closing costs are deductible for purchase of rental property? Can appraisal & credit report fees be added to the basis of the property?

I purchased a rental property in 2018.  I'm trying to figure out what closing costs I can deduct or add to the basis of the purchase price.

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Coleen3
Intuit Alumni

What closing costs are deductible for purchase of rental property? Can appraisal & credit report fees be added to the basis of the property?

Not every expense can be added to the basis.

Settlement costs. Your basis includes the settlement fees and closing costs for buying property. You cannot include in your basis the fees and costs for getting a loan on property. A fee for buying property is a cost that must be paid even if you bought the property for cash.

The following items are some of the settlement fees or closing costs you can include in the basis of your property. Abstract fees (abstract of title fees). Charges for installing utility services. Legal fees (including title search and preparation of the sales contract and deed). Recording fees. Surveys. Transfer taxes. Owner's title insurance. Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions.

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1 Reply
Coleen3
Intuit Alumni

What closing costs are deductible for purchase of rental property? Can appraisal & credit report fees be added to the basis of the property?

Not every expense can be added to the basis.

Settlement costs. Your basis includes the settlement fees and closing costs for buying property. You cannot include in your basis the fees and costs for getting a loan on property. A fee for buying property is a cost that must be paid even if you bought the property for cash.

The following items are some of the settlement fees or closing costs you can include in the basis of your property. Abstract fees (abstract of title fees). Charges for installing utility services. Legal fees (including title search and preparation of the sales contract and deed). Recording fees. Surveys. Transfer taxes. Owner's title insurance. Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions.

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