When purchasing a home for personal use, be it your primary residence or 2nd home, there are only two deductions you can take on your federal tax return.
- Mortgage interest, to include any prepaid interest that is typically clearly itemized and identified as such on the closing statement.
- Property taxes paid to the local taxing authority or reimbursed by you, to the seller. This to will be clearly identified as such and itemized on the closing statement.
Any other expenses paid are not deductible at all, ever. Some expenses are added to the cost of house, while other expenses are just flat out not deductible at all.
For those expenses that add to the cost basis of the property, that will not come into play on any tax return unless one of three things happens in the future, after you close on the purchase of the house.
- You sell the property.
- You convert the property to a rental property, or some other type of business use.
- You die.
So it's important that you retain a copy of "ALL" paperwork you receive at the closing, and keep it in your physical possession for as long as your own the property. If you have a Last Will & Testament, it's not a bad idea to keep a copy of that paperwork with it, as your heirs will find it very helpful should you pass while you own the property.
