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New Member
posted Jun 4, 2019 4:21:51 PM

What is the adjusted basis for home sold

0 2 752
2 Replies
New Member
Jun 4, 2019 4:21:53 PM

Decreases to basis added in my answer.

New Member
Jun 4, 2019 4:21:54 PM

[Information added 11:20 am PST 4-18-17]

Adjusted basis is cost basis plus increases and minus decreases. Increase the basis of any property by all items properly added to a capital account. These include the cost of any improvements having a useful life of more than 1 year.

The following items are some of the settlement fees or closing costs you can include in the basis of your property when you purchased it and when you sold it.

  • 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.

See the screenshot below for more examples.


Some settlement fees and closing costs you can’t include in your basis are:

  • Fire insurance premiums,

  • Rent for occupancy of the house before closing,

  • Charges for utilities or other services related to occupancy of the house before closing,

  • Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994),

    • Charges connected with getting a mortgage loan, such as:

      1. Mortgage insurance premiums (including funding fees connected with loans guaranteed by the Department of Veterans Affairs),

      2. Loan assumption fees,

      3. Cost of a credit report,

      4. Fee for an appraisal required by a lender, and

    • Fees for refinancing a mortgage.

  • Decreases to Basis The following are some items that reduce the basis of property. 
  • Section 179 deduction. 
  • Nontaxable corporate distributions. 
  • Deductions previously allowed (or allowable) for amortization, depreciation, and depletion. 
  • Exclusion of subsidies for energy conservation measures. 
  • Certain vehicle credits. 
  • Residential energy credits. 
  • Postponed gain from sale of home. 
  • Investment credit (part or all) taken. 
  • Casualty and theft losses and insurance reimbursement. 
  • Certain canceled debt excluded from income. 
  • Rebates treated as adjustments to the sales price. 
  • Easements. 
  • Gas­guzzler tax. 
  • Adoption tax benefits. 
  • Credit for employer­ provided child care.   

See Publication 551 (Rev. December 2016) - IRS.gov  for additional information that may apply to your particular situation