Hi,
Im calculating the capital gains tax owed on the sale of my primary residence. We purchased a home warranty for the buyers (paid through escrow). Can this be included as a selling expense?
thanks!
I saw some mixed answers for similar questions posted by others. Some said it can't be deducted for primary residence so I wanted to make sure.
@n_j wrote:
I saw some mixed answers for similar questions posted by others. Some said it can't be deducted for primary residence so I wanted to make sure.
It's not a tax deduction. What it really is, is a reduction in the selling price. (If the home sold for $300,000 but you made a $10,000 seller concession, the selling price was really $290,000. It doesn't matter if the sellers concession was for closing costs, repairs, or a warranty.)
If you don't have a 1099-S, then you could just report the lower selling price, but if you have a 1099-S the price needs to match, so you can enter the cost as a selling expense. Entering the cost as a selling expense has the same effect on the capital gains calculation as lowering the selling price.