Can we deduct our purchase of a home at the end of 2017, if our first payment wasn't made until 2018?

derekbecka810 — Thu, 06 Jun 2019 15:32:29 GMT

If you made your first mortgage payment in 2018, then you...

KarenJ — Thu, 06 Jun 2019 15:32:31 GMT

If you made your first mortgage payment in 2018, then you will have to claim that on your 2018 return. However, if you paid points at closing (prepaid interest), this can be taken as a mortgage interest deduction not on Form 1098.

Some items may be deductible. Most closing costs are not...

Opus 17 — Thu, 06 Jun 2019 15:32:33 GMT

Some items may be deductible.

Most closing costs are not deductible. Instead, they are added to the cost of the house and may reduce your capital gains when you sell. These closing costs are deductible in the year you closed:

1. Daily mortgage interest from the day you closed to the end of the month. Shown on your closing document, this interest may not be included on your 1098. You can add it if it wasn't included.

2. Property taxes. Generally, the seller has prepaid a year's worth of property taxes and you will give a credit to the seller for the amount of tax that is allocated to the days you will own the home. That property tax credit is deductible as if you paid it directly to the city or county.

3. Mortgage "points." Origination fees or points are considered a form of mortgage interest and must be deducted over the life of the loan, unless you meet certain tests. If you paid points, turbotax will ask you questions to see if you can deduct them all at once (in the year you closed) or if you have to spread them out. Origination fees are considered points if they are a percentage of the loan amount (not a flat fee) and if they are not assigned to any specific services like document processing, attorney fee, or other specific costs.

Your down payment is not deductible, that's you paying for the house. Money put into escrow is not deductible until it is actually used to pay a property tax bill. Until then it's still technically your money.

topic Can we deduct our purchase of a home at the end of 2017, if our first payment wasn't made until 2018? in Deductions & credits

Can we deduct our purchase of a home at the end of 2017, if our first payment wasn't made until 2018?

If you made your first mortgage payment in 2018, then you...

Some items may be deductible. Most closing costs are not...