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

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

coleman07_1963 — Mon, 26 Oct 2020 09:02:23 GMT

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?

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

Critter-3 — Mon, 26 Oct 2020 11:51:54 GMT

All of this is a cost of sale.

https://ttlc.intuit.com/community/rental/help/i-sold-my-rental-property-how-do-i-report-that/00/26251

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

Opus 17 — Mon, 26 Oct 2020 17:50:22 GMT

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.

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

Critter-3 — Mon, 26 Oct 2020 20:51:02 GMT

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).