Add up what your home cost you, the way the IRS counts it.
The price, the closing costs that count, your improvements and a few decreases. The steps follow IRS Publications 523 and 551.
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What did you pay for the home?
The price on your purchase settlement statement. The loan counts too, not only the down payment.
This is where Pub 523's basis starts for a home you bought. An inherited or gifted home starts from a different number; Pub 551 has those rules.
Part 1 of 4
What goes into basis
Pubs 523 and 551, part by part. Beside each, your figure once you give it.
The purchase price, down payment and loan included.
Abstract, utility installation, legal, recording and survey fees, transfer taxes you paid, owner's title insurance, and the seller's costs you paid.
Additions and upgrades still part of the home: a bedroom, a bathroom, a deck, a garage, a patio, landscaping, a driveway, a new roof, heating or air conditioning. Special assessments for local improvements, and repairs of damage after a casualty, count too.
Depreciation, casualty losses you deducted, insurance paid for a casualty, energy credits and subsidies, seller-paid points, taxes the seller paid for you, easement payments, and gain postponed from a home sold before May 7, 1997.
Part 2 of 4
What stays out
Charges for getting a loan: points, origination fees, mortgage insurance, loan assumption fees, a credit report, a lender's appraisal, refinancing fees. Also fire or casualty insurance, rent or utilities before closing, and amounts put in escrow for future taxes and insurance.
Repairs and maintenance that keep the home in good condition without adding value, like painting or fixing a leak, stay out, and so does an improvement that's no longer part of the home.
Part 3 of 4
The records behind each number
The settlement statement from your purchase shows the price and closing costs. Receipts, invoices and permits show improvements. Pub 551 describes keeping accurate records of everything that affects basis, and IRS Topic 305 describes keeping them until the period of limitations ends for the year you sell.
A home you inherited or were given starts from a different basis. Pub 551 describes those rules, and Pub 523 points to them.
Part 4 of 4 · where to read next
Questions people ask
What is the cost basis of a home?
For a home you bought, IRS Publication 523 starts with what you paid, including the down payment and any loan. Certain purchase closing costs and the improvements you made are added, and certain amounts are taken off. The result is your adjusted basis.
Which closing costs from buying the home go into basis?
Publications 523 and 551 list abstract of title fees, charges for installing utilities, legal fees for the title search, contract and deed, recording fees, survey fees, transfer taxes you paid, owner's title insurance, and amounts the seller owed that you paid, like back taxes or their commission.
Do loan costs go into basis?
No. The publications leave out charges for getting a loan: points, origination fees, mortgage insurance, a credit report and a lender's appraisal. Fire insurance, rent before closing and escrow for future taxes stay out too.
What counts as an improvement?
Work that adds to the home's value, makes it last longer or adapts it to a new use, like a bedroom, a deck, a new roof or central air. Repairs that only keep the home in good condition, like painting or fixing a leak, don't count, and neither does an improvement that's no longer there.
What if I inherited the home or it was a gift?
The starting number is different, and this calculator doesn't cover it. Publication 551 describes basis for inherited and gifted property, and Publication 523 points to it.
Reference, not tax advice
Keighbor is a software company, not a tax adviser. These figures follow the steps in IRS Publications 523 and 551 as general information, not tax advice about your sale, and they are not the tax you owe. Your situation may differ, and tax rules change. Before you file or rely on a figure, ask a tax professional such as a CPA or an enrolled agent.
Written and researched by Keighbor Research · read against IRS Publications 523 and 551 · how we research and check what we publish
Keep the receipts behind your basis.
A Room keeps your settlement statements, receipts and every document from the sale in one place, next to the people and dates they came with.
Organize my saleWhere it is in your Room
- Open your Room
- Documents, in the menu on the left
Purchase papers and improvement receipts sit together, found by name.