Yes, you will include eligible costs that you paid on behalf of the buyer as part of your selling expenses.
This information should be listed on your Closing Statement (HUD-1). You may want to contact your real estate agent for more details related to this sale.
You are allowed to deduct from the sales price almost any type of selling expenses, provided that they don’t physically affect the property. Such expenses may include:
- appraisal fees
- attorney fees
- closing fees
- document preparation fees
- escrow fees
- mortgage satisfaction fees
- notary fees
- points paid by seller to obtain financing for buyer
- real estate broker's commission
- recording fees (if paid by the seller)
- costs of removing title clouds
- settlement fees
- title search fees, and
- transfer or stamp taxes charged by city, county, or state governments
Just remember that you do not need to enter the sale of your primary residence if:
- You never used your primary residence as a rental
- You have a loss on the sale of your home (Personal capital losses are not reported on your tax return)
- You did not receive a Form 1099-S and
- You meet the home gain exclusion (see below)
You can take the gain exclusion as long as you considered the home your "primary residence" for 2 of the last 5 years. If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse. See Sale of Your Home for more information on the exclusion.
If you still need to enter your sale of your primary residence (which may require an upgrade in TurboTax), please follow these steps:
- Once you are in your tax return (for TurboTax Online sign-in, click Here), click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
- Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
- Next click on “I’ll choose what I work on”
- Scroll down the screen until to come to the section “Less Common Income”
- Choose “Sale of Home (gain or loss)” and select “start’
- You will want to use the "Easy Guide" to determine the adjusted basis on this home
Say "yes" that you sold your main home and TurboTax will guide you on entering this information. You will need:
- The date you sold your home and the selling price (from your closing statement)
- The date you bought your home and the purchase price (from your closing statement)
- The cost of any major improvements you made, so we can deduct them for you
- Form 1099-C if you sold your home at a loss (short sale)
Just remember to check the box to have your home sale reported on your tax return but ONLY if you receive a 1099-S
I had to pay the buyers closing cost when I sold my home because they could not borrow enough to cover their cost. Can I claim this on my income tax and if so where do I enter it.
If you have to claim capital gain on the house, you can add that to the cost of the sale.
If you are able to take the Home Sale Gain Exclusion, you cannot.
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I’m selling a home that I’ve owned for less than a year, and the buyer has requested that we increase the purchase price by $10,000 so that I can contribute $10,000 towards their closing costs. Will this affect my tax obligations?
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