I do I deduct real estate commissions on TT

[tassluis2]

How do I dedecut $35000 of real estate commissions paid in a home closing

[CatinaT1 · Accepted solution]

Was this your residence or a rental property?  

If you sold the home you lived in, you might qualify for the Section 121 Exclusion ($250k gain exclusion for singles, $500k for married couples). In this case it is not a deduction but a Selling Expense.

First, calculate your amount realized - [Sales Price - Selling Expenses ($35,000 commission + others) = Amount Realized.]

If your total gain is under the exclusion limit, you don't even have to report the sale on your taxes (unless you received a Form 1099-S). Even if your gain is under the exclusion, you must report it if you received a Form 1099-S. If you didn't receive one and are under the limit, you can skip it entirely.

If you received a Form 1099-S or are above the exclusion amount, here's what to do:

1. Go to Federal > Wages & Income.
2. Look for Less Common Income > Sale of Home. 
3. You will enter the Gross Sales Price (from Box 2 of your 1099-S)
4.  TurboTax will specifically ask for "Sales Expenses." Enter the $35,000 there.
5. The software will automatically subtract it from your proceeds to find your net capital gain.

Since you are looking at your closing statement for that $35,000, don't miss these other common selling expenses you can also "deduct" in the same way:

• Legal fees and escrow/title charges.
• Transfer taxes or stamp taxes.
• Advertising costs or home staging fees.
• Seller-paid points (if you paid points on behalf of the buyer).

If this was a Rental or Investment Property, the $35,000 is used to calculate your Adjusted Basis.

Here is how to enter this:

1. Go to Federal > Wages & Income.
2. Go to Rental Properties and Royalties (Schedule E).
3. Select Edit next to the specific property you sold.
4. Look for the Assets/Depreciation section.
5. Select Edit next to the "Residential Real Estate" (the house itself) and check the box that says "I sold or disposed of this asset in 2025."
6. TurboTax will then ask for the "Sales Price" and "Selling Expenses." * Enter the $35,000 in the Selling Expenses box here.

When you sell a rental, TurboTax will ask you to allocate the sales price and the $35,000 commission between the House and the Land because land is not depreciable. You'll need to look at your property tax bill to see the percentage (e.g., 20% Land / 80% Structure) and apply that same percentage to your $35,000 commission. You will also need to dispose of any other assets related to the rental property.

[tassluis2]

CatinaT1, thank you for your thorough reply. Is was a personal residence that we lived in continuously for 5 years. No our gain on the sale was not over the threshold---it was under $250,000. Because the $35,000+ we paid in costs to sell it seems a shame to not be able to include this in our deductions this year. It would put us over the standard deduction so it seems like w should itemize but Turbo Tax is not user friendly in this respect