Your cost basis in the property is what you paid for the property when you originally purchased it, plus what you paid for any property improvements during the time you owned it, minus the amount of any property insurance claims that were paid out during the time you owned it.
Things that can alter that:
Costs associated with acquisition of the property are added to the cost basis. For example, title transfer fees paid at the courthouse to take the seller's name off the deed and put the buyer's name on the deed. Typcially, the seller will "NOT" have any costs related to acquisition/disposition of the property, as they are usually all paid by the buyer.
Cost associated with Acquisition/Disposition of the loan are amortized and deducted over the life of the loan by the buyer. For the seller, if they have any loan disposition costs they are just flat out a deductible sales expense. While not unheard of, it is not common for the seller to have any such costs.
One area of contention can be property taxes. If the seller paid property taxes "before" the closing date of the sale, any portion of those property taxes refunded by the buyer are subtracted from the cost basis.
If the seller did not pay property taxes prior to the closing on the sale, then any portion of the property taxes assessed and paid at the closing are subtracted from the cost basis.
Finally, if the seller paid any commisions (usually to a real estate agent) out of their sales price, that commission amount paid by the seller is a deductible sales expense.
