<\/span><\/h2>\nLand:<\/b> The cost of the land on which your rental property sits cannot be depreciated, but it can be included in the cost basis.<\/p>\n
Building:<\/b> The cost of constructing or purchasing the building itself can also be included in the cost basis.<\/p>\n
Improvements:<\/b> Any significant improvements made to the property, such as adding a swimming pool or renovating the kitchen, can be included in the cost basis.<\/p>\n
Assessments for local improvements:<\/b> Any assessments paid for local improvements, such as sidewalks or sewage systems, can be added to the cost basis.<\/p>\n
Legal fees:<\/b> Legal fees incurred during the purchase or sale of the property can be included in the cost basis.<\/p>\n
Settlement fees:<\/b> Settlement fees, such as title search and recording fees, can also be added to the cost basis.<\/p>\n
Transfer taxes:<\/b> Transfer taxes paid during the purchase can be included in the cost basis.<\/p>\n
Cost of clearing title:<\/b> Any costs associated with clearing the title of the property can be included in the cost basis.<\/p>\n
Survey fees:<\/b> Survey fees incurred during the purchase can be added to the cost basis.<\/p>\n
Broker’s commissions:<\/b> Any commissions paid to a broker for the purchase can be included in the cost basis.<\/p>\n
Fees for appraisal:<\/b> Any fees paid for the appraisal of the property can be added to the cost basis.<\/p>\n
Cost of zoning:<\/b> Any costs associated with obtaining zoning variances or approvals can be included in the cost basis.<\/p>\n
Understanding what can be included in the cost basis of a rental property is crucial for accurately calculating depreciation and potential gains or losses. By carefully documenting and keeping track of all expenses related to the purchase, improvement, and maintenance of your rental property, you can ensure that you are maximizing your tax benefits and minimizing your tax liability.<\/p>\n
Now, let’s address some related or similar FAQs regarding the cost basis of rental properties:<\/p>\n