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Question of the week: I just bought my home and paid a lot of state transfer taxes in addition to recording fees, which were required to record my deed. Can I deduct these as taxes on my tax return in the US?
Sandy’s Response: Good question. Many states have transfer taxes and recording fees on real estate. They, however, are NOT deductible when you purchase your principal residence or even when you purchase a rental property. You get to add them to your basis. Thus, when you sell your home, they will reduce the gain. If you convert your home to a rental, they will increase your basis for depreciation.