Funds at closing (Tax)

General Real Estate Investing
1

Hello investors,

How cash credit from seller is treated from income tax stand point? For example, if seller contributes $2,000 to escrow at closing to cover repairs that buyer found during property inspection - are these $2k considered to be regular income from IRS perspective?

I am new to REI, trying to learn basics so I have same base knoledge when I talk to CPA.

Thanks!

2

It will reduce the cost basis of the purchased property and is not reportable as income to the buyer. The seller will have an increased cost basis in the property.

3

kkiefer216,

Thanks a lot, this is very good news.

Alex79.