closing cost

[gman]

When selling a personal residence the cost of the home sold includes BOTH the settlement charges when sold and when ORIGIONALLY purchased
Is that right? This property was bought and sold within a year and does not qualify for the exclusion, so would it be reported on schedule D?

[Roland Slugg]

Well, the selling costs don't really add to basis, per se. They are "costs to sell." However, when reporting the sale on Schedule D, they get added to the property's cost/basis anyway.

Be sure to include only costs that can legitimately be added to basis, for the purchase, and costs that are true selling costs, for the sale. Do not include, (1) tax deductible items such as real estate taxes or loan interest, or (2) personal items such as prorated water, sewer, HOA dues, etc.

[gman]

yes,

but is it correct that I get to add both closing costs from the sale and the purchase of the home at the time of the sale.

[Gretel]

gman, you probably have looked into this already: Partial exclusion for unforseen circumstances. I almost missed this for one of my clients who sold a second home 9 months after the first home.

[Bees Knees]

but is it correct that I get to add both closing costs from the sale and the purchase of the home at the time of the sale.

In general, both the cost of purchasing property, and the cost of later selling that same property are included in the basis of the property. However, be careful because not all purchase and selling costs are added to basis. Look at page 6-2 in TTB for the correct treatment of whether something can be added to basis or not.

[gman]

bought and sold

So if taxpayer buys and then sells in less than a year, and has a profit, it is reportable on schedule D? Taxpayer then purchased another home for more money. Would sale of that home still be taxable?

thank you