topic Can I include a home warranty as part of sales expenses for a sold home? in Deductions & credits

Can I include a home warranty as part of sales expenses for a sold home?

hughcamp — Tue, 04 Jun 2019 00:39:30 GMT

In addition to concessions paid at closing, we purchased a home warranty on a house we sold. Can i claim the home warranty under the Sales Expenses?

Unfortunately, the IRS will not allow you to deduct the c...

ChelsiE2 — Tue, 04 Jun 2019 00:39:32 GMT

Unfortunately, the IRS will not allow you to deduct the cost of a home warranty as a selling expense when computing the gain/loss on a sale of your home.

Here is what the IRS allows for Selling Expenses:

Any sales commissions (for example, a real estate agent's sales commission)
Any fees for a service that helped you sell your home without a broker
Any advertising fees
Any legal fees
Any mortgage points or other loan charges you paid that would normally have been

the buyer's responsibility

Re: Can I include a home warranty as part of sales expenses for a sold home?

Bittner73 — Sat, 01 May 2021 17:06:21 GMT

Hello. I wanted to see if anything has changed as far as the rules on this question. I recently sold a primary residence that I owned for less than 2 years. The buyer demanded a home warranty as part of the contract after the home inspection phase. My tax person said I CAN include the home warranty expense as part of my “selling expenses” to lessen my capital gains, along with me also giving the buyer a $5,000 seller credit towards her closing costs. I realize tax laws change from year to year so just wanted to see if this is why I am getting different guidance.

Re: Can I include a home warranty as part of sales expenses for a sold home?

ErnieS0 — Sun, 02 May 2021 18:17:48 GMT

No. There is no change to the tax law. Home warranties on personal residences are not deductible (much like you cannot deduct hazard insurance). They are deductible on income-producing property.

Can I include a home warranty as part of sales expenses for a rental property?

LLC2020 — Sun, 16 Jan 2022 20:49:22 GMT

So if I sell an apartment building and the buyer requires me to buy a home warranty for each of the apartments, is this cost deductible? If so, what tax category do I include it in?

Thank you

Re: Can I include a home warranty as part of sales expenses for a rental property?

Critter-3 — Sun, 16 Jan 2022 20:57:12 GMT

If you are the seller and you buy a warranty policy for the new owners then that IS included in the cost of selling the property. If you are the buyer and it is a personal residence there is no deduction to be taken.

Re: Can I include a home warranty as part of sales expenses for a rental property?

LLC2020 — Sun, 16 Jan 2022 20:58:05 GMT

Thank you!!