If you made improvements to the house, you can add these to your cost basis to reduce your capital gains. Please review what are considered improvements in the following IRS publication 523. Also you can certain settlement costs on your closing statements when you first bought the house and when you sold the house.
Publication 523 list the following settlement costs that can be deducted.
• Abstract fees (abstract of title fees),
• Charges for installing utility services,
• Legal fees (including fees for the title search and preparing the sales contract and deed),
• Recording fees,
• Survey fees,
• Transfer or stamp taxes, and
• Owner's title insurance and realtor fees
To claim these costs. When you bought the house, you will add these to the basis of your house. For the recent settlement costs when you sold your home, you will subtract these from your proceeds. This will also reduce your capital gains.
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