Closing Statements are now used instead of form HUD-1.
Only some closing costs are deductible. Most of the closing costs on a home purchase are not. Instead, they are added to the cost (basis) of the home to reduce any gain when you sell the house down the road.
Examples of closing costs added to the basis of the house are:
- title fees,
- real estate commissions,
- appraisal costs,
- home inspections,
- documentary stamps,
- credit report costs,
- costs of an abstract,
- transfer taxes,
- flood certificate,
- attorney fees, etc.
Some closing costs that are deductible include:
- interest paid at the time of purchase (the charge at closing would normally be done for interest up to the date of first payment.);
- real estate taxes charged to you;
- points [Sometimes called origination fees and expressed as a percentage of the amount borrowed.) [On a refinance they need to be amortized over the life of the loan or 84 months, whichever is less, unless the points were used to improve your main home.]; and
- private mortgage insurance costs but, if prepaid, only the amount attributable to this year based on an 84 month amortization.
All of these items can be entered in the Your Home section on the Deductions & Credits screen.
@Jessi A
