Question

Do annual real estate taxes and mortgage interest count towards adjusted cost basis on a second home?

Forum|Forum|2 years ago
March 30, 2024
1 reply
0 views

Hello TurboTax community

For a second property sold (non-rental), does the mortgage interest paid on it along with the yearly real estate taxes paid on it count towards the adjusted cost basis for it?

I've accounted for the initial purchase, settlement costs, permanent repair costs and initial sales transfer tax at time of settlement - but am I able to include the mortgage interest and the annual real estate taxes into that adjusted cost basis?

If yes, please include IRS.gov reference too if you could.

Thanks in advance

M

Mike9241

NO!!! on a second home, those expenses are Schedule A deductions subject to the limitations for taxes and mortgage interest.

TerboTacksAuthor

Thanks for the response! With that said, where do we enter a Schedule A into TurboTax? The "investment" section didn't prompt me for anything to add real estate taxes for second home in particular.

DawnC

To enter real estate taxes and mortgage interest on Schedule A, search for 1098 and use the Jump to 1098 link to be taken to the mortgage interest section. If you search for Schedule A, it will take you to medical expenses to page through first. You can get there from the Deductions and Credits section as well.

There is no tax deduction for transfer taxes, stamp taxes, or other taxes, fees, and charges you paid when you sold your home. However, if you paid these amounts as the seller, you can treat these taxes and fees as selling expenses. See IRS - Selling your home.

Selling Expenses are:

Any sales commissions (for example, a real estate agent's sales commission)
Any advertising fees
Any legal fees
Any mortgage points or other loan charges you paid that would normally have been the buyer's responsibility
Any other fees or costs directly related to the sale of your home