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Tax deductible closing costs - Legal fees

Started by HappyBigApple
almost 13 years ago
Posts: 40
Member since: Aug 2009
Discussion about
Are legal fees (ie, lawyer's fees) related to a home purchase tax deductible? While most closing costs are NOT deductible, a section of publication 530 talks about lawyer's fees and other fees to be added to the "basis" -What does that mean, and what are the implications at tax time of the added cost ot the basis? Many thanks, C
Response by flarf
almost 13 years ago
Posts: 515
Member since: Jan 2011

Basis is the value of the property used when calculating your gains (or losses) when selling.

For example, if you buy a property for $100,000 and incur $3,000 of transaction fees that can be added to the basis, your basis in the property is $103,000.

If you then sell the property for $110,000, your gain is $7,000 -- not $10,000.

There's no tax implication for a change in basis until you sell the property.

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Response by HappyBigApple
almost 13 years ago
Posts: 40
Member since: Aug 2009

thank you. Basically can we say no closing cost is tax deductible then, except points?

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