Question

Legal fees for perfecting title in a rental property

Forum|Forum|4 years ago
March 6, 2022
1 reply
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I sold my rental property last year, and was able to enter all of my basis adjustments in the Asset Summary except the legal fees I incurred to buy out my half partner. I don't see an Asset type in Turbo Tax that seems appropriate, but the IRS publication on rental property sales says I can include these as part of my adjusted basis. Where do I enter these?

ColeenD3

All basis adjustments are done in the same way.

Items added to basis.

You can include in your basis the settlement fees and closing costs you paid for buying your home. A fee is for buying the home if you would have had to pay it even if you paid cash for the home. The following are some of the settlement fees and closing costs that you can include in the original basis of your home.

Seller closing costs are made up of several expenses. Here’s a quick breakdown of potential costs and fees:

Agent commission
Transfer tax
Title insurance
Escrow and closing fees
Prorated property taxes
Credits toward closing costs
Attorney’s fees

E

EABrowneAuthor

I understand that it is an asset that I can use to adjust my basis. My question is where to enter it in the Asset Summary, as it isn't real property, and it isn't a refinancing fee, and it wasn't part of the property purchase or sale. It was incurred partway through my owning of the property and I couldn't expense it then, but I understand I can use it to increase my basis now that I have sold the property. I just can't figure out what asset category to select in Turbo Tax.

ColeenD3

Yes, you would attach it to the real property, since that is what the fee is based on. It is not a separate thing. You even quoted the IRS' stance on this, " IRS publication on rental property sales says I can include these as part of my adjusted basis".