Fees and Closing Costs (settlement fees) are added to the basis of your home and not a deduction per se like mortgage interest or property taxes. See the information below.
Yes, mortgage Interest on a construction loan may be tax deductible if you itemize and meet the IRS loan limitations. TurboTax will determine how much you may be able to deduct.
- Per IRS Publication 936 page 4: Home under construction. You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. The 24-month period can start any time on or after the day construction begins.
If you sold a qualified home, you can make deductions up until the time you sold your home, which includes mortgage interest, mortgage insurance, points and real estate/property taxes. You should be able to see these on the 1098 from your lender.
You can also deduct:
- Home improvement costs (which are more or less permanent changes to the house and not the same as repairs and maintenance)
- Mortgage interest and/or real estate/property taxes charged at closing (other than that, almost no closing costs are deductible)
Some settlement fees and closing costs you can include in your basis are:
• Abstract fees (abstract of title fees),
• Charges for installing utility services,
• Legal fees (including fees for the title search and preparing the sales contract and deed),
• Recording fees,
• Survey fees,
• Transfer or stamp taxes, and
• Owner's title insurance.
Look at Selling Your Home by the IRS for more in-depth information.
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