What is Basis in my home residence?

Figuring Out Your Home’s “Basis” (a.k.a. What You Paid & Then Some!)

Alright, homeowner (or future homeowner), let’s talk about your home’s basis—which is just a fancy way of saying what you originally paid for the place, plus some extra costs that sneak their way in.

Bought It? Built It? Here’s How It Works

If you bought or built your home, your basis starts with the purchase price. But it doesn’t stop there! You also get to tack on certain extra costs that came with closing the deal. And if the seller covered any points for you, that lowers your basis. (Yep, free money isn’t totally free—at least not in tax land.)

Settlement Costs That Count

So, what sneaky little fees actually increase your home’s basis? Here’s a handy list:

Title work fees – like abstract or title search fees
Utility connection charges – because having lights and water is kinda important
Legal fees – for all that paperwork magic
Recording fees – making it official!
Survey fees – to prove your home is where it’s supposed to be
Transfer or stamp taxes – because the government wants a slice
Owner’s title insurance – to make sure your deed is drama-free

And if you, the buyer, agreed to pay for things the seller owed (ouch), those also increase your basis. This includes:

• Unpaid real estate taxes the seller ghosted on
• Back interest – yep, interest from before you even owned the house
• Recording or mortgage fees the seller conveniently left for you
• Costs for repairs or improvements the seller should’ve handled
• Sales commission – if you’re covering that too!

Basically, if you paid it at closing and it wasn’t just a regular expense, it likely adds to your home’s basis. Keep track of it all—because when it’s time to sell, knowing your basis can save you big time on taxes!