Question
ierra bought a vacation home for $275,000, plus $700 in legal fees. She paid an additional closing cost of $5,500 to cover the cost of a survey, title search, and recording fees. She also gave her realtor a gift card for $300. What is the basis of her vacation home?
Answers
GPT-4o mini
To calculate the basis of Sierra's vacation home, we need to sum up all the costs associated with the purchase of the property. The basis includes the purchase price of the home and any additional costs that are necessary to acquire the property.
Here are the components:
1. Purchase price of the home: $275,000
2. Legal fees: $700
3. Closing costs: $5,500
4. Gift card to realtor: $300 (generally considered a selling expense rather than a direct acquisition cost, but for the basis, we include it as it was part of the transaction)
Now, let's add these amounts together:
\[
\text{Total Basis} = \text{Purchase price} + \text{Legal fees} + \text{Closing costs} + \text{Gift card}
\]
\[
\text{Total Basis} = 275,000 + 700 + 5,500 + 300
\]
\[
\text{Total Basis} = 275,000 + 700 + 5,500 + 300 = 281,500
\]
Therefore, the basis of Sierra's vacation home is **$281,500**.
Here are the components:
1. Purchase price of the home: $275,000
2. Legal fees: $700
3. Closing costs: $5,500
4. Gift card to realtor: $300 (generally considered a selling expense rather than a direct acquisition cost, but for the basis, we include it as it was part of the transaction)
Now, let's add these amounts together:
\[
\text{Total Basis} = \text{Purchase price} + \text{Legal fees} + \text{Closing costs} + \text{Gift card}
\]
\[
\text{Total Basis} = 275,000 + 700 + 5,500 + 300
\]
\[
\text{Total Basis} = 275,000 + 700 + 5,500 + 300 = 281,500
\]
Therefore, the basis of Sierra's vacation home is **$281,500**.