topic Do city permit costs count towards home tax basis? in Deductions & credits

Do city permit costs count towards home tax basis?

Yoyoguy — Mon, 23 Feb 2026 12:41:09 GMT

Per https://www.irs.gov/publications/p523, Building permit charges for new construction are counted towards home tax basis.

My question is, would permit charges for Improvements That Increase Basis are also counted towards home tax basis? Or, These costs are separate from the value of the property and do not directly affect the property tax basis?

Re: Do city permit costs count towards home tax basis?

MaryK4 — Mon, 13 Feb 2023 02:39:17 GMT

Yes, any permit charges paid for any improvements to your property can be added to the basis of the property.

Re: Do city permit costs count towards home tax basis?

Yoyoguy — Mon, 13 Feb 2023 05:12:41 GMT

Any references to this? I could not find any IRS references for this...

Re: Do city permit costs count towards home tax basis?

JohnB5677 — Mon, 13 Feb 2023 13:57:09 GMT

Please see Publication 523 page 8

Construction. If you contracted to have your house built on the land you own, your basis is:

The cost of the land, plus
The amount it cost you to complete the house, including:
- The cost of labor and materials,
- Any amounts paid to a contractor,
- Any architect's fees,
- Building permit charges,
- Utility meter and connection charges, and
- Legal fees

On page 9 it also says:

Improvements, Improvements add to the value of your home, prolong its useful life, or adapt it to new uses. You add the cost of additions and improvements to the basis of your property. The building permit charge is not excluded.

Re: Do city permit costs count towards home tax basis?

Hal_Al — Mon, 13 Feb 2023 17:30:31 GMT

Deleted