When determining escrow fees paid when purchasing rental property, should I include expenses paid by seller? For example, the seller paid for land survey, do I include ?

In determining settlement fees and other costs for the purchase of a rental property.

The following settlement fees and closing costs for buying the property are part of your basis in the property.

• Abstract fees.
• Charges for installing utility services.
• Legal fees.
• Recording fees.
• Surveys.
• Transfer taxes.
• Title insurance.
• Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions.

The following are settlement fees and closing costs you can’t include in your basis in the property, but they may be deductible as an expense.

• Fire insurance premiums.
• Rent or other charges relating to occupancy of the property before closing.
• Charges connected with getting or refinancing a loan, such as:
• Points (discount points, loan origination fees),
• Loan assumption fees,
• Cost of a credit report, and
• Fees for an appraisal required by a lender.

The closing costs that are tax deductible on your rental property may include your attorney fees, state-required inspection fees, other legal fees, appraisal fees, and even your refinance application fee where applicable. Insurance and repair costs for the rental property are also typically tax deductible.

Also, don’t include amounts placed in escrow for the future payment of items such as taxes and insurance.

Publication 527 (2022), Residential Rental Property