Purchased a 2nd home in 9/21. Seller & lender (related companies) provided credits in escrow. How do these credits affect cost basis for capital gains?

[JulieS]

No, your escrow account doesn't affect the basis of a home in any way. 

In simplest terms, your adjusted basis is the amount you paid for the property, plus the cost to acquire the property, improvements, and minus certain costs for tax credits, depreciation, and more. 

That being said, there are slightly different rules for determining the basis to calculate a gain on a sale, or the basis for deprecation. If the seller and buyer are related parties, that changes things too. 

If these "credits" placed in escrow do affect the basis of your home, the information will be shown on your closing statement. That is the document you need to work with. 

TurboTax has detailed information in the program to help you figure your basis, but if you want a more detailed answer, ‌ respond back with more detail about exactly what you are trying to do. 

[COWBOYS FAN]

Thanks for your response. I misspoke in my original post. I should have said “credits @ closing (statement) not “escrow”..The credits were the direct result of two lenders competing for the loan. The seller, a large home building company with a related mortgage company, worked together to beat the outside lender I was working with. These credits were offered to get my loan business not sell the house. Hopefully, this additional detail helps clarify how the credits might affect the cost basis. It seems, because these credits are directly related to placing the loan, they would have no effect on the cost basis? Thanks.

[Cynthiad66]

These credits do not affect the cost basis.  What you paid for the home is considered the basis of the home.  Your basis is what you paid plus any costs in acquiring the property.

For more details in determining your basis, click this link:  Determining the Basis of an Asset

@COWBOYS FAN