The purchase of a home with cash is not directly reportable on your tax return. However, you can deduct property taxes paid and add the purchase price to the cost basis of your home.
Here are the steps to deduct property taxes in TurboTax:
- Open or continue your return.
- Navigate to the property tax section:
- TurboTax Online/Mobile: Go to property tax.
- TurboTax Desktop: Select Search Topics. Search for and select property tax.
- Answer Yes to the question Did you pay property or real estate taxes?
- Follow the on-screen instructions to enter your property/real estate taxes.
Read here how improvements can add to the cost basis of your home
- Cost basis is essential for calculating capital gains or losses when selling an asset, ensuring tax efficiency, and maintaining accurate financial records. It includes adjustments for reinvested dividends, stock splits, and capital improvements. For more details, refer to IRS Publication 551.