In: Finance
Sales price: $500,000
Property taxes attributable to period before purchase: 8,000
Property taxes attributable to period between purchase and year-end: 2,500
Title insurance: 500
Total amount spent: $511,000
What is the total cost of the property for tax purposes?
total cost of the property for tax purposes = Sales price + Property taxes attributable to period before purchase + Title insurance
500000 +8000 + 500
$ 508500
** Property taxes attributable to period between purchase and year-end: =It will be claimed as expense and not added to cost of property since the same is paid after the asset is purchased and ready for use.