Rental property cost basis labels are different from Closing Disclosure form

[sviyer]

Turbotax asks me for these values to compute the cost basis of my rental property

A Abstract and Recording Fees

B Legal Fees, Title Search, Document Preparation

C Land Surveys

D Title Insurance

E Transfer or Stamp Taxes

F Expenses You Paid for the Seller

However, my realtor did not issue me a HUD. All I have is the closing disclosure.

My closing disclosure contains the following:

1. Origination charges - Administrative Fee

2. Appraisal Fee

3. Credit Report Fee

4. Flood Certification

5. Tax service

6. Title-Courier Fee

7. Title - Lender's Title Insurance

8. Title - Settlement Fee

9. Recording Fees

10. City/County Tax/Stamps (Seller paid)

11. Real Estate Commission (Seller paid)

12. Title - Owner's Title Insurance (Seller paid)

Can you please help me with how these fit into the turbotax boxes... because the labels are different? Thanks!

[AnnetteB6 · Accepted solution]

Try using these values:

A Abstract and Recording Fees  = 9 Recording Fees

B Legal Fees, Title Search, Document Preparation = 2 Appraisal Fee; 3 Credit Report Fee; 5 Tax Service; 6 Title Courier Fee; 8 Title Settlement Fee

C Land Surveys = 4 Flood Certification

D Title Insurance = 7 Lender's Title Insurance

E Transfer or Stamp Taxes = none (seller paid these)

F Expenses you paid for the Seller = none shown on your list

The seller paid items would not add to your basis.  Item 1 Origination charges would be amortized over the life of your loan instead of being added to the basis.  

@sviyer

[sviyer]

Hi AnnetteB6

Thank you for the detailed answer. It was very helpful and exactly what I wanted. Thanks again!

[thughesga]

Hi,

I purchased a rental property this year and I'm trying to figure out which entries in the Settlement Statement go where in Turbo Tax for: Abstract and Recording Fees, Legal Fees, Title Search, Document Prep, Title Insurance, Transfer of Stamp Taxes and Expenses You Paid to Seller.

Here's my best guess - can anyone tell me if I'm correct or incorrect on any of this?

Abstract and Recording Fees
Recording fees to Clerk of Superior Court 56.50
City of Atlanta Water Deposit 8/12 80
GRMA Fee to State of Georgia 10
ICL Charge to Chicago Tite Ins Co 50

Legal Fees, Title Search, Document Prep
Attorney Fee $775
Title/Tax Exam & Review Fee $225
Title Bind Fee $75
Appraisal Fee $610
Credit Report $33

Property Inspection $420

Termite Inspection $45

Title Insurance
Lenders Title Insurance $1011.25
Owner's Title Insurance $1368.75

Transfer of Stamp Taxes?
Deed Transfer Tax to Clerk of Superior Court $500
Mortgage Intangible Tax to Clerk of Superior Court $1125

What about % of Loan Amount (Points), Prepaid Interest, Homeowners Insurance? Do any of these get included?

Thanks in advance for your help.

[JamesG1]

Prepaid interest will likely be reported on a 1098 Mortgage interest statement.  I would use the 1098 information but cross-check against the closing papers.  Reported as Mortgage interest on the Schedule E.

For Points, see the discussion here of discount points and origination points.

On rental property, discount and origination points are amortized (spread out) as a depreciation expense over the life of the loan and reported as Mortgage interest on the Schedule E.

Homeowners insurance would be reported as an Insurance premium on the Schedule E.

[thughesga]

Thanks JamesG1

What about my guesses for what to include in these entries in TurboTax - are they correct:

Abstract and Recording Fees

Legal Fees, Title Search, Document Prep

Title Insurance

Transfer of Stamp Taxes

Expenses You Paid to Seller (I have none)

[DianeW777]

 No. Some of the expenses you listed are not part of the cost of the property.

What about % of Loan Amount (Points), Prepaid Interest, Homeowners Insurance? Do any of these get included?

• No, these charges do not get included in the cost of the rental property. The points are amortizable over the life of the loan for rental property.  If you later refinance with a different lender then you can deduct the remainder of the points at that time.  If you should refinance with a different lender then the points remaining get added to any additional points and are amortized over the life of the new loan.

Your Lists that represent the amounts you paid (not lender):

Abstract and Recording Fees - These fees are added to the cost of the rental property.

Legal Fees, Title Search, Document Prep - These fees are added to the cost of the rental property.

Title Insurance - Owner's Title Insurance Only

Transfer of Stamp Taxes - Added to the cost basis of the property.

@thughesga

[thughesga]

Thanks for the response but can you be more specific based on the information I supplied earlier. Which items I listed can/should be applied to which fields in Turbo Tax?

[JillS56]

Most of the costs of the purchase of the property would go to your cost basis. 

Deductible closing costs are those for interest, certain mortgage points, and deductible real estate taxes.  Your list does not include these items.  

Many of the settlement fees and closing costs for buying the property become additions to your basis in the property and part of your depreciation deduction, including:

Abstract fees: 
GRMA Fee to State of Georgia 10 

ICL Charge to Chicago Title Ins Co 50

     (I am not exactly sure what these fees are but you have them listed as abstract fees.  )

Charges for Installing Utilities:  City of Atlanta Water Deposit 8/12 80

Legal Fees:  Legal Fees, Title Search, Document Prep Attorney Fee $775
 

Recording Fees:  Recording fees to Clerk of Superior Court 56.50
 

Survey Fees:   There are no survey costs in your list

Transfer Taxes:   Deed Transfer Tax to Clerk of Superior Court $500
                              Mortgage Intangible Tax to Clerk of Superior Court                                            $1125

Title Insurance:  Title/Tax Exam & Review Fee $225
                             Title Bind Fee $75

                             Lenders Title Insurance $1011.25
                             Owner's Title Insurance $1368.75

Deductible Rental Expenses

Rental Expenses