Are real estate commissions on buying and selling a house deductable

[IreneS · Accepted solution]

For the Seller of a property, real estate commissions are considered a selling expense.

For the Buyer of a property, the commissions (along with other closing costs) are added to the basis of the property, to reduce the gain when the property is eventually sold. 

For more information, see IRS Pub. 523 - Selling Your Home

[jhwgw]

Can escrow fees be added to Cost Basis from the Purchase and Sale of the Same home ?

I realize that there are escrow closing expenses that can be added to the Cost Basis of a home when it is originally, purchased (IRS Pub 523). 

However, when selling this same home 10 years later, can I add the expenses from escrow, such as Real Estate Commissions to the Cost Basis also? 

In other words, what is the total list of escrow fees/ expenses that can be added to the Cost Basis when selling a home?   This is not clear in IRs Pub 523 or 551

[RobertB4444]

Escrow fees from the refinance of your primary residence are added to the basis of that residence as are any major improvements. 

[jhwgw]

Thanks!

Also, concerning the sale of our residence in 2021, I am figuring the deprecitation allowed/allowable after May 1997 (for a home office used 2012-2021.)   I have reviewed my tax returns from 2012-2020 and added all of the depreciation listed on Form 4562, Line 17.  This should be my total deprectiation.  I don't have deprection for 2021, since I have not completed my tax return yet.  I assume TT will figure this in.

TT then ask for the AMT depreciation allowed after May, 1997.  I checked all my past 2012-2020 tax returns on Form 3885A (Altern. Min. Tax Deprec. Report) and there is 0 listed on each one.  So I have entered 0 into TT.

Does this seem accurate?  Thanks for your time.

[Vanessa A]

Yes, that all sounds accurate.  If you had no AMT depreciation, then you would enter 0.  And yes, TurboTax will calculate your depreciation for 2021.  When you enter your original purchase price and years owned, after you go through a few more screens of questions, TurboTax will say "We calculated XXXX as your accumulated depreciation, is this correct?"  You can then see if those numbers match your numbers.  If they do not, then you can correct the numbers. 

[jhwgw]

Thanks so much for the quick reply!