Home Sales Expenses - What can we include?

[DeathTaxesAndCoffee]

We sold a home in '23 and we're wondering what we can include as sales expenses from our closing disclosure. I'm pretty sure we can't include county taxes, so mostly wondering about the following listed under seller paid:

Commision - Listing agent = $#,####.##

Commision - Selling agent = $#,####.##

Title - Owner's title insurance to title company = $##.##

Title - Escrow fee to title company = $###.##

Title - Government Lien Search to title company = $##.##

Title Insurance Premium Adjustment = $###.##

Seller Credit = $####.##

Thank you for any help.

[DawnC · Accepted solution]

If you paid transfer taxes, stamp taxes, or other taxes, fees and charges as the seller, you can include them as selling expenses.   Everything on there is either a selling expense or an adjustment to your basis.   Selling Expenses include:

• Any sales commissions 
• Any advertising fees
• Any legal fees
• Any mortgage points or other loan charges you paid that would normally have been the buyer's responsibility
• Any other fees or costs to sell your home

You can also deduct:

• Home improvement costs as an adjustment to the basis of the home you sold (which are more or less permanent changes to the house and not the same as repairs and maintenance)
• Mortgage interest and/or real estate/property taxes charged at closing
• Selling expenses to reduce your gain on the sale side of the home (see above)

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Some settlement fees and closing costs you can include in your basis are:

• Abstract fees (abstract of title fees),

• Charges for installing utility services,

• Legal fees (including fees for the title search and preparing the sales contract and deed),

• Recording fees,

• Survey fees,

• Transfer or stamp taxes, and

• Owner's title insurance.

Some settlement fees and closing costs you can’t include in your basis are:

• Fire and casualty insurance premiums,

• Rent for occupancy of the house before closing,

• Charges for utilities or other services related to occupancy of the house before closing,

• Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994),

• Charges connected with getting a mortgage loan, such as:

  1. Mortgage insurance premiums (including funding fees connected with loans guaranteed by the Department of Veterans Affairs),

  2. Loan assumption fees,

  3. Cost of a credit report,

  4. Fee for an appraisal required by a lender,

  5. Points (discount points, loan origination fees), and

• Fees for refinancing a mortgage.

Look at Selling Your Home by the IRS for more in-depth information.

Home Sale Deductions

@DeathTaxesAndCoffee 

[Pip_12_mn]

If the gain on my house is less than $500K filing a joint return and I lived in the house for at least 2 of the last 5 years, is there any reason to adjust the basis or list  selling expenses? Can I just enter the purchase and selling prices?

[DawnC]

Purchase and selling price is fine; unless there was a decrease to the basis (example: decrease in valuation due to unreimbursed storm damage to the property), you do not have to add selling expenses or improvements.     Remember, you have to recapture any depreciation if you ever rented it.   @Pip_12_mn