Buyer agent's commission

Forum|Forum|3 years ago
October 29, 2022
2 replies
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For the purchase of a rental property, is the Buyer agent's commission a deductible expense? I heard the realtor's commission can be expensed but I don't know if that's for the Buyer or the Seller.

Not A Product Question

Mike9241

Not for the purchaser. it's an acquisition cost for the buyer. meaning it has to be capitalized as part of the total cost.

Critter-3

Depends ... who paid it ? Usually the buyer pays RE commission for both sides then it is a buyer's expense.

NCPERSON1

whether the buyer or seller is paying it is NOT a deductible expense.

rather. if the Seller is paying it, then it is a 'seller's expense' that reduces the capital gain (technically not an expense, but a reduction of the capital gain). if the buyer is paying it, then it is added to the cost basis of the house.

Look at the closing statement to determine who really paid the commission.

Opus 17

Employee

It's not an expense, it's a capital adjustment.

If you are the buyer, and you pay $100,000 plus a $5000 commission, you would enter the cost basis of the property as $105,000. By including the commission in the cost basis, it may reduce your capital gains if and when you sell, but it is not an expense deductible against ongoing income.

If you are the seller, and you sell the property for $100,000 but you pay a commission of $5,000, then your selling price is considered to be $95,000. This reduces your capital gains tax, but is not an expense deductible against current income.