Home Inspection Fee on purchase of main home

[peterstribe]

Can this cost be added to the homes basis

[jtax]

Yes. home inspection fees increase your basis and therefore reduce any possible gains. Otherwise they are not deductible.

[peterstribe]

Do you know if this applies to pest inspections?

[AmyC]

Fees that were required to purchase the house, not the loan, are part of the basis.

Publication 551 (12/2022), Basis of Assets - IRS

Settlement costs.

Your basis includes the settlement fees and closing costs for buying property. You can't include in your basis the fees and costs for getting a loan on property. A fee for buying property is a cost that must be paid even if you bought the property for cash.

The following items are some of the settlement fees or closing costs you can include in the basis of your property.

Abstract fees (abstract of title fees).

Charges for installing utility services.

Legal fees (including title search and preparation of the sales contract and deed).

Recording fees.

Surveys.

Transfer taxes.

Owner's title insurance.

Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions.

Settlement costs don't include amounts placed in escrow for the future payment of items such as taxes and insurance.

[peterstribe]

Are you saying a home inspection fee can not be added to your cost basis?  This on a main home, not rental.

[TomK2023 · Accepted solution]

Yes, a home inspection fee is only deductible if you are buying a property for rental or as an investment (not if you are a simple homebuyer).

[peterstribe]

TomK2023.  I understand, it is not deductable, but can these fees or expenses for like home inspections or pest inspection be added to your cost basis in the main home.

[ThomasM125]

If the inspection fees were associated with qualifying the home to be suitable to be purchased, then they can be added to the cost basis of the home, unless they are only done as a condition to obtain a mortgage.

[Edited 2/1/24 at 12:58 PM PST] @peterstribe