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Tax question on sale of rental property
Old 12-11-2019, 12:00 PM   #1
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Tax question on sale of rental property

Hi,
Just sold a residential rental property (single home),

where we gave the buyer a $5000 credit towards closing.


I know that closing costs aren't usually considered tax deductions, but can be applied as "selling costs" (similar to sales commissions), and in effect lowers the selling price which ends up lowering the capital gains tax you pay.


Can anyone tell me if the $5000 credit would apply here ?


Thanks.
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Old 12-11-2019, 12:12 PM   #2
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I would include it as either a $5k sales cost or as a $5k reduction to the sales price... either way the gain is reduced by $5k.
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Old 12-11-2019, 01:16 PM   #3
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You (and the IRS) will receive a 1099-S stating the gross sales price of the house, according to the closing documents. So unless the $5K was in fact a reduction of the sale price, I would include it with other closing costs.
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Old 12-11-2019, 01:58 PM   #4
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Quote:
Originally Posted by Cobra9777 View Post
You (and the IRS) will receive a 1099-S stating the gross sales price of the house, according to the closing documents. So unless the $5K was in fact a reduction of the sale price, I would include it with other closing costs.


I would certainly list this as a selling expense which would increase your cost basis
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