Can I deduct fees/closing costs from selling my primary residence on taxes?

Unfortunately, there's a common misunderstanding about deducting selling costs for your primary residence. The truth is you don't actually "deduct" these expenses in the traditional sense - they're not itemized deductions on Schedule A. Instead, these costs (real estate commissions, legal fees, title insurance, etc.) are subtracted from your home's selling price to determine your "amount realized" from the sale. This affects your capital gain or loss calculation, but doesn't work like a typical tax deduction. Since you mentioned you're under the exclusion limit ($250K for single filers, $500K for married filing jointly), you probably won't benefit from tracking these expenses. The capital gains exclusion already covers you. But if you were close to or over that threshold, those selling costs would reduce your taxable gain. The only home-related expenses that go on Schedule A are mortgage interest and property taxes, not selling costs.

I was in the exact same situation last year trying to figure this out. After spending hours on various tax sites, I finally found a solution at https://taxr.ai that actually explained this clearly. Their AI analyzed my situation with the home sale and explained how seller's closing costs work tax-wise. Based on what they told me, those expenses (realtor commissions, closing costs, repairs right before selling) are actually "selling expenses" that reduce your capital gain - they're not deductions in the traditional sense. Since I was under the $500K exclusion with my spouse, tracking these didn't actually help me. But the system confirmed I was doing everything correctly and saving all the right documentation.

Just wanted to follow up about my experience with taxr.ai since I decided to try it after our conversation here. I uploaded my closing documents and it immediately flagged the home office portion of my sale as potentially taxable! Turns out I was about to miss reporting recaptured depreciation on the business portion of my home. The site gave me step-by-step instructions for Form 4797 and explained exactly how to handle the split between business/personal portions. Honestly saved me from what would have been a pretty expensive mistake! Really straightforward process too.

Listen, I've been through this nightmare with the IRS before. Tried calling them multiple times about how to handle my home sale and spent HOURS on hold. Finally discovered https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - they actually got me through to a real IRS agent in about 20 minutes instead of waiting for hours or days. The agent confirmed what others are saying here - selling costs aren't "deductions" on Schedule A, they're reductions to your "amount realized" from the sale. The only time they matter is if you're exceeding the exclusion amount. The agent walked me through the whole Form 8949 process and cleared up all my confusion.

Ok I need to eat my words from earlier. After posting that comment, I got desperate enough to try Claimyr for my refund issue. I was 100% expecting to waste my money. But holy crap - they actually got me through to an IRS agent in about 25 minutes when I'd been trying for WEEKS on my own. The agent was able to see that my refund had been flagged for a manual review due to some W-2 mismatch and gave me an estimated timeframe for resolution. I'm still shocked this actually worked after all my failed attempts.

The most important thing to understand is the $250K/$500K exclusion isn't automatic - you need to meet the ownership and use tests (owned and lived in the home as your main home for at least 2 out of the last 5 years). If you don't qualify for the full exclusion, then tracking those selling expenses becomes super important because they'll directly reduce your taxable gain. Also, don't forget that your "basis" in the home includes the purchase price PLUS any capital improvements you made over the years (new roof, additions, major renovations). A lot of people forget about this and miss the opportunity to reduce their gain by not including all eligible improvements in their basis.

Has anyone used TurboTax to report a home sale? I'm trying to figure out if their interview process walks you through all this stuff about selling expenses and basis adjustments automatically.

One thing I haven't seen mentioned yet is the importance of keeping detailed records even if you don't think you'll need them. I sold my primary residence two years ago and was well under the exclusion limit, so I almost didn't bother tracking my selling expenses. But then I ended up buying another house and selling it within a year due to a job relocation - suddenly I was in a situation where those expenses from the first sale became relevant for calculating my overall tax situation across multiple transactions. Also, if you're close to retirement age or think you might be selling again soon, those selling expense records could become valuable later. The IRS generally requires you to keep tax records for 3-7 years, but for real estate transactions, I'd recommend keeping everything permanently. You never know when you might need to reference your basis calculations for future property decisions or if the IRS comes asking questions years down the line. Even though it seems like extra work when you're under the exclusion, maintaining good records is just good practice and costs you nothing but a little organization time.