Question

Sierra 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?
$275,700
$280,500
$281,200
$281,500

Answer 1

Basis = cost plus capitalized acquisition costs. Include purchase price $275,000 + legal fees $700 + closing costs $5,500 + realtor payment $300 = $281,500.