They are not deductible per se, but they can be added to the basis, as you say.
The only deductible
closing costs are those for interest, and deductible real estate taxes. Other
settlement fees and closing costs for buying the property become additions to
your basis in the property (your original purchase cost). Those can be part
of your yearly depreciation deduction for the rental property.
These basis
adjustments include:
*
Abstract fees,
*
Charges for installing utility services,
*
Legal fees,
*
Recording fees,
*
Surveys,
*
Transfer taxes,
*
Title insurance, and
* Any
amounts the seller owes that you agree to pay, such as back taxes or interest,
recording or mortgage fees, charges for improvements or repairs, and sales
commissions.
