Which home-purchase costs may affect basis?
Your settlement statement is a mix of costs that may go to basis and costs that never do. Which is which, and why the day you close is the cheapest time to sort it.
6 min read · Last reviewed July 23, 2026
Almost everything written about home basis starts at the first renovation. That skips a step. Your basis begins on the day you close, and the settlement statement in your closing folder is a list of costs — some of which may be added to it, and some of which never can.
It is worth ten minutes now, because that document is the single hardest thing to reconstruct later and the easiest thing to file today.
Reading your settlement statement
The split is broadly between the costs of acquiring the property and the costs of borrowing money to do it (Publication 530, Publication 551):
May be added to basis
- Abstract fees, and legal fees for the title search and deed
- Recording fees
- Surveys
- Transfer taxes
- Owner’s title insurance
- Charges for installing utility services
- Amounts the seller owed that you agreed to pay — back taxes, for instance, or a sales commission
Generally cannot be
- Points and loan origination fees
- Mortgage insurance premiums
- The lender’s required appraisal
- Credit report fees
- Loan assumption fees
- Costs of refinancing later
- Casualty or hazard insurance premiums
- Amounts placed in escrow for future tax or insurance
- Rent or utilities for use before closing
The rough shape worth remembering: buying costs may go to basis, borrowing costs generally do not, and prepaidamounts are not costs at all yet — they’re your money sitting in escrow waiting to be spent.
Points are the common confusion
Points get written about constantly, because for many buyers they may be deductible as mortgage interest. That is a different question from basis, answered by a different part of the tax code, and the two get run together. Deductible or not, points are a cost of borrowing and generally do not increase your basis.
What to actually do
You do not need to split the statement line by line yourself, and this is not the moment to try. Two things are enough:
- Keep the settlement statement.Closing Disclosure, ALTA statement, HUD-1 — whatever your closing produced. Scan it or photograph it the week you move in, while you still know which folder it is in.
- Log the purchase price and date, and log your closing costs as a separate line. Then it is one record with a document attached, not a memory.
HomeBasisLedger has a Closing costs category for exactly this, labeled may vary rather than adds to basis, because as the lists above show the honest answer is that some of it does and some of it does not. Record the total, keep the statement, and let your tax professional split it when it matters.
If you bought years ago
Your closing documents may still exist. Your title company, closing attorney or lender may retain copies, and the deed itself is on record with the county. It is worth one afternoon of asking — it is the only part of your basis you cannot rebuild from memory or from a contractor’s invoice.
Start with what basis is if the term is new, or read what records to keep for everything after closing day.
HomeBasisLedger keeps records; it is not tax advice. What qualifies as an improvement, how your basis is calculated, and what you may owe are questions for you and your tax professional.
Start the record while it’s easy
The five minutes after a contractor leaves beats fifteen years of memory. Free covers one home and every improvement you log.
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