Calculating tax basis with lender credit

[Yoyoguy]

1. When I purchased my primary home, I got "lender credit" from bank. While calculating the tax basis for my home, should I subtract this lender credit? or, ignore this number for tax basis?

2. What is the document, that IRS would require as proof of evidence for the "closing costs"? Is it bank "Closing disclosure"?

3. How do generally most people maintain the tax basis for home? I don't see any good tools for this. Any recommendations?

[Anonymous_]

@Mike9241 

[NCperson]

@Yoyoguy 

1) the lender credit relates to the mortgage - not the value of the home.  it is not part of the tax basis

2) what you are looking for is the 'settlement statement' or also called the 'HUD-1'.    it looks something like this: 

https://www.hud.gov/sites/documents/1.PDF

3) never found one 'pencil and paper' may do best. 

[Yoyoguy]

Thank you.

This settlement statement is from Escrow who handles the transaction (or) from the bank?  https://www.hud.gov/sites/documents/1.PDF 

I see lender credit is not added to tax basis, and also it is not a deduction I can take under itemized. Curious, there is no tax implication at all, for lender credit?

[NCperson · Accepted solution]

@Yoyoguy - 

if you are in a state like CA, there would have been an Escrow Agent who would have put together the Settlement Statement - it's a federally required form.  If an attorney handled your closing (outside of CA for sure), then they would have prepared it.   DIfferent states work differently, but it would have been whomever conducted the closing: normally an Escrow Agent or an Attorney. 

None of the expenses related to the mortgage (appraisal, tax service, etc.) are part of tax basis or deductible and the lender credit is simply saying the lender is picking up some of those costs, so it has no tax implications either as it is excluded.