Deduct improvement (repair) to vacation (second) home required for sale?

[wcrr]

As part of a sale this year of our second home (which we had inherited in 2008) we agreed to put in a new septic system to replace the old one which was badly in need of repair. This was agreed to in writing in the Real Estate Condition Report. The new septic system cost (in round numbers) $10,000.  Can we deduct the cost of this repair from our taxes?  If so, is this considered an adjustment to the cost basis?  Or is it a sales expense not already listed in the Seller's Closing Statement which details the various other prorations and adjustments?  Thank you. 

We are using TurboTax Premier.

[fanfare]

whether you add it to expenses, or add it to basis, the result is the same.

@wcrr 

[wcrr]

Thank you.  Is one approach favored over the other (e.g., addition to basis vs. additional sales expense) by the IRS in terms of a "good fit"?   

[fanfare]

IRS is not going to know your accounting.

Expenses are all added together into one item "Expenses" that is shown on Form 8949.

[wcrr]

Thank you.

[Carl]

While the IRS may not know different, since adding/replacing the septic system is in fact, a property improvement, the correct way is to add it to the cost basis of the property.

[wcrr]

Thank you, Carl.