What items on the sale of home "Settlement Statement" are income tax deductible for the seller?

[bwa · Accepted solution]

Almost no closing costs incurred on a sale of a residence are deductible. An exception is any mortgage interest or real estate taxes charged at closing to bring them up to the closing date. All other closing costs (Title fees, real estate commissions, documentary stamps, credit report costs, costs of an abstract, transfer taxes, home inspection, flood certificate, attorney fees, etc. ), instead of being deductible, reduce the sales price of the property (or increase the cost if you receive a Form 1099-S.)

On the sale of a personal residence, reducing the sales price would reduce the gain. However, there may not be any tax advantage in doing so, as in most instances the gain on the sale of a residence is wholly or partly exempt from tax anyway.

For the sale of a residence, up to $250,000 ($500,000 on a joint return where you both lived in the residence) of gain can be excluded from income if you lived in and owned the house for two of the last five years.

(You may have a smaller exclusion if the property was used as a rental during the five year period, and you may have income from recapture of depreciation if you claimed an office in the home deduction for the home.)

If you work through the interview on sale of a residence, TurboTax will compute the exclusion.

Look under the wages and income tab for less common income, then sale of home.