Can we add government recording & transfer charges from sale of 2nd home to our cost basis?

[bethdajo]

In 2017 we sold a 2nd home bought in 1985 and have a capital gain of $200k. We didn't use a real estate agent for the sale. On the settlement statement it lists government recording & transfer charges that include POA recording fee to title company, tax stamp for county deed and state deed to the county treasurer. Can these costs be added to our cost basis?

[MichaelDC]

Yes, the closing costs on the purchase are added to the basis. You can also deduct selling expenses from the sales price (gross proceeds). Almost all closing costs can be listed. Sales expenses are listed in the sellers column of your settlement statement and include:

• commissions
• appraisal fees
• broker's fees
• legal fees
• advertising fees
• home inspection reports
• title insurance
• transfer taxes or fees
• geological surveys
• loan charges (points) or other fees paid on the buyer's behalf
• any fees for a service that helped you sell your home without a broker (listing fees, promotional fliers, etc.) 

Sales expenses do not include:

• mortgage payoffs
• home equity loan payoffs
• rent-back costs
• payoff to creditors
• property taxes
• home owner association fees

Please feel free to post any additional details or questions in the comment section.

[Rocok]

Hi MichaelDC,

I bought house 2019, paid lots tax,

where fill following item to 2019 Deduction? I cannot find form in "Your Home"

Government Recording and Transfer Charges
City Transfer Tax to Director of Finance
State Transfer Tax to Circuit Court for Baltimore City 
Recording Fees (Deed) to Circuit Court for Baltimore City 
Recording Fees (Mortgage) to Circuit Court for Baltimore City
State Recordation Tax w/ Exmpt to Director of Finance

Thanks.

[ThomasM125]

Those expenses are not deductible on your tax return when you purchase a house. They can be added to the cost of the house so that when you sell it someday, you can subtract them from the sale amount to reduce your potential taxable gain on the sale of the house.