Q: We sold a residential rental property last year at a substantial gain. I know we can deduct the property taxes. Can we also deduct the selling fees and closing costs? L.C., Ormond Beach, Fla.
A: No. Your selling costs are not deductible in the same manner as mortgage interest expenses and property taxes. But that's not the end of the story. These selling expenses reduce the capital gain from your property sale. For example, let's say the gain was $300,000 and you incurred $25,000 in selling fees. In that case, your capital gain is reduced to $275,000 ($300,000 minus $25,000). At the current 15 percent rate, that would save you $3,750 in tax (15 percent of $25,000). Qualified selling expenses include closing fees, title searches, attorney's fees and recording costs. For details, see IRS Publication 551, Basis of Assets, at www.irs.gov/pub/irs-pdf/p551.pdf.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/22790/cut-tax-on-rental-property-sale "