Certain events that occur during the period of your ownership may increase or decrease your basis, resulting in an "adjusted basis." Add all the costs/expenses since 2012 that you incurred to come up with your adjusted basis. For example, increase your basis by items such as the cost of improvements (tear down) that add to the value of the property.
To report the sale, see Where do I enter the sale of a second home, an inherited home, or land?
Real property, also called real estate, is land and generally anything built on or attached to it. If you buy real property, certain fees and other expenses become part of your cost basis in the property.
Your basis includes the settlement fees and closing costs for buying or acquiring the 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.
