IRS Publication 551 — Basis of Assets
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“Vehicle Credits Unless you elect not to claim the qualified electric vehicle credit, the alternative motor vehicle credit, the new clean vehicle credit, the previously owned clean vehicle credit, or the commercial clean vehicle credit for which you qual- ify, you may have to reduce the basis of each vehicle for which you claimed a credit, including any credit transfer- red to the dealer at the tim…”
Real property, also called real estate, is land and generally anything built on or attached to it. If you buy real property, certain fees and other expenses become part of your cost basis in the property.
Real estate taxes. If you pay real estate taxes the seller owed on real property you bought, and the seller didn't reimburse you, treat those taxes as part of your basis. You can't deduct them as taxes.
If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. Don't include that amount in the basis of the property. If you didn't reimburse the seller, you must reduce your basis by the amount of those taxes. Settlement costs. Your basis includes the settlement fees and closing costs for buying property. You can't include in your basis the fees and costs for getting a loan on property. A fee for buying property is a cost that must be paid even if you bought the property for cash. The following items are some of the settlement fees or closing costs you can include in the basis of your property.
• Abstract fees (abstract of title fees).
• Charges for installing utility services.
• Legal fees (including title search and preparation of the sales contract and deed).
• Recording fees.
• Surveys.
• Transfer taxes.
• Owner's 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.
Settlement costs don't include amounts placed in escrow for the future payment of items such as taxes and insurance. The following items are some settlement fees and closing costs you can't include in the basis of the property.
1. Casualty insurance premiums.
2. Rent for occupancy of the property before closing.
3. Charges for utilities or other services related to occupancy of the property before closing.
4. Charges connected with getting a loan. The following are examples of these charges. a. Points (discount points, loan origination fees). b. Mortgage insurance premiums. c. Loan assumption fees. d. Cost of a credit report. e. Fees for an appraisal required by a lender. Publication 551 (12-2025) 3
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