For my rental property I purchased in 2020, can I deduct the admin fee, Closing fee, Processing fee, Underwriting fee, Appraisal fee, Credit Report Fee, settlement fee?

[ROWDYS]

I am in the enter escrow fees section for my rental property and trying to figure everything, I don't have a HUD-1 statement, I have a closing cost statement for a 30 yr conventional loan.  Thanks!

[DaveF1006]

No. According to IRS.gov, the only fees that are deductible are for interest, certain mortgage points and deductible real estate taxes. All other fees are  additions to your basis in the property and part of your depreciation deduction.  You will need to add these in your return as assets to be depreciated. 

[ROWDYS]

Thanks.  That is where/why TurboTax is asking me to add these things, but I do not have a HUD-1 statement I have conventional loan statement.

[DaveF1006]

No, at this point you can add these using your conventional loan statement. 

[ROWDYS]

I know this, but Turbo Tax uses the "Hud-1" statement as their guide, and so it is totally different than the Conventional Loan Statement... That is why I asked my first question.

[sergepl]

I realize this post is a year old, but I have the same question... 

Looking for a "translation" b/w the HUD-1 statement format still used by TurboTax (2021) and the Closing Disclosures issued in recent years...  Also, need to clarify whether "credit report" and "flood certification" should be included in basis or amortized deduction.

[LeonardS]

The credit report will be deducted as an expense and the flood certification will be added to the basis.

Generally, deductible closing costs are those for interest, certain mortgage points, and deductible real estate taxes.

Many other settlement fees and closing costs for buying the property become additions to your basis in the property and part of your depreciation deduction, including:

• Abstract fees
• Charges for installing utility services
• Legal fees
• Recording fees
• Surveys
• Transfer taxes
• Title insurance
• Any amounts the seller owes that you agree to pay (such as back taxes or interest, recording or mortgage fees, sales commissions, and charges for improvements or repairs).

@sergepl

[sergepl]

Does this "mapping" look correct?  The bullet text refers to the TurboTax fields (for "Cost Basis" only) and the letter followed by a number refer to the Closing Disclosure designations.

Cost Basis

• Abstract and Recording Fees:
  1. E1 – Recording Fees
• Legal Fees, Title Search, Documentation Preparation:
  1. B1 – Appraisal Fee
  2. B3 – Document Preparation Fee
  3. B4 – Document Review Fee
• Land Surveys:
  1. B5 – Flood Certification
  2. C1 – Survey Fee
• Title Insurance:
  1. C3 - Title – Courier Fee
  2. C4 - Title – Escrow Fee
  3. C5 - Title – Lender’s Title Insurance
  4. C6 – Title - Recording Service Fee
  5. C8 - Title – Title Endorsement Fee
  6. C9 - Title – TX Guarantee Fee
  7. H2 - Title – Owner’s Title Insurance (optional)
• Transfer or Stamp Taxes:
  1. E – N/A
• Expenses You Paid for the Seller: N/A

Amortized (over term of mortgage):

• A. Origination Fees:
  1. A1 - % of Loan Amount (Points) – Blank
  2. A2 – Closing Fee
  3. A3 – Processing Fees
  4. A4 – Underwriting Fees
  5. B2 – Credit Report

[DaveF1006]

Yes. The mapping looks correct as far as which fees get added to the basis and which are amortized over the life of the loan. It follow the same guidelines that the IRS lists on their site. 

[User ID 4993393]

Serge, where did you get that table from? Thank you