Basic Homeowners' Deductions

• Although inspections on a home aren’t deductible expenses, a homeowner may still take advantage of several homeowner-based deductions. The cost of financing a mortgage, interest payments made in addition to the principal, the cost of mortgage insurance premiums, real estate property taxes, and sales taxes assessed against the purchase of a home are deductible. Fees for service visits, landscaping upkeep, maintenance and homeowner’s insurance aren’t deductible expenses.
  
  

Selling Your Home

• Homeowners who sell their home and hire an inspector during the sales process can’t claim the fee as an income tax deduction, but they can claim the cost of the inspection, and all other sales-related fees such as advertising, real estate agent fees and legal fees, as part of the tax basis for the house. The tax basis is the total amount invested in the home and its sale, including purchase price and any additions, from which you calculate capital gains. Any profit above the home’s adjusted basis that you receive as part of the transaction is subject to long- or short-term capital gains taxes depending upon how long you owned the property.
  
  

Homeowner Gains Exclusion

• Inspection fees’ impact on a home’s basis may not affect most people’s gains tax situations, however. The IRS allows homeowners who owned a property for more than two years and lived in the home being sold for the past two years to claim a homeowner exclusion from gains taxes. The homeowner exclusion exempts the first $250,000 in profits from long-term gains taxes, so including inspection fees in the basis of the sale of a primary residence isn’t necessary unless a home sells for at least $250,000 more than its purchase price.
  
  

Investment Properties

• The IRS allows landlords who receive rental income from real estate investments to treat their expenses related to rental activity as a business rather than a personal expense. This treatment allows landlords to claim the cost of maintenance and repairs – though not improvements or additions – to a rental property as deductions from their business income. Inspection fees, whether as part of a purchase or sale, or as a part of a maintenance plan for rental property, may be claimed as an expense in this case.