Deductions & credits
The HUD-1 statement is rarely used these days, with the exception of reverse mortgages. Each state, and sometimes closing agent, will have their own version of the closing statement. So we can't tell you with certainty what line of the statement applied to each category.
Most of the settlement charges for buying and selling a home are not deductible. They are either added to the basis of the property or deducted from the sales price for calculating capital gain.
Some items on the closing statement that you can deduct on your return are:
- real estate taxes;
- private mortgage insurance;
- mortgage interest; and
- loan origination fees (“points”) that you paid.*
*Check with your lender, though. Many lenders include the interest and points paid at closing in the 1098 they issue for the year.
Points are entered in the Mortgage Interest section of TurboTax. After entering mortgage interest from your 1098, you will see a screen, Did you pay points in 2020 when you took out the loan? Enter the points there if they were not included in the interest reported on the 1098.
In the sample closing statement posted in the screenshot below:
- Abstract & recording fees - line E1
- Legal fees, title search, document prep - C5
- Land Survey - C2
- Title Insurance - C3 + C4 + C6 + H7
- Transfer or stamp tax - E2
The reason you are entering these costs is so they can be added to the basis of your house when you sell in the future to reduce any capital gain. Except for the points, they won't affect your tax return.
