The basis of property you buy is usually its cost. The cost is the amount you pay in cash, debt obligations, other property, or services.
Your cost also includes amounts you pay for the following items.
• Sales tax.
• Freight.
• Installation and testing.
• Excise taxes.
• Legal and accounting fees (when they must be capitalized).
• Revenue stamps.
• Recording fees.
• Real estate taxes (if assumed for the seller).
You may also have to capitalize (add to basis) certain other costs related to buying or producing property.
Basis may also include the following items:
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.
There are other associated costs that may be included in the basis of the property. Use the link below for more information:
Basis of Residence
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