topic Re: Home Purchase Settlement Statement in Home loans

Home Purchase Settlement Statement

debbierose — Mon, 09 Apr 2018 23:28:02 GMT

We purchased a home in Maryland in 2017. Can anyone tell me what line numbers from the Settlement Statement are deductible? I am getting conflicting answers. I’ve read the Publication 530 and 936 but I am still questionable about some things. More specifically, are the following line items deductible?

I would greatly appreciate any help and guidance on this matter!

First Page of Settlement Statement:

Settlement Charges to Buyer
Deposit or Earnest Money

(# ?) Seller Assist

Cash [ ] From or [ ] to Borrower

Second Page of Settlement Statement:

Realtor Fees or Commission (also line 705 & 706)
Daily Interest Charges
Mortgage Insurance Premium
Initial Deposit for your Escrow Account
Total Title Charges
Government Recording Charges
Transfer Taxes

(# ?) Lien Sheet Reimbursement

(# ?) Home Warranty

(# ?) Release Racording Fee

Thank you, Debbie

Re: Home Purchase Settlement Statement

PaulaM — Mon, 09 Apr 2018 23:34:10 GMT

The deductible expenses available to you on a home purchase are; interest, mortgage insurance premiums, property taxes and points. All are itemized deductions reported on a schedule A.

Other fees, such as commissions, attorney fees, preparation of deed, abstract fees, owner title insurance, recording fees are added to the basis of your home, and not deductible. These come into play when you sell your home.

Re: Home Purchase Settlement Statement

debbierose — Tue, 10 Apr 2018 00:58:44 GMT

Ok, thank you

Re: Home Purchase Settlement Statement

PaulaM — Tue, 10 Apr 2018 01:10:23 GMT

You are welcome 🙂

Re: Home Purchase Settlement Statement

Carl — Sun, 13 May 2018 16:04:28 GMT

" I am getting conflicting answers."

Actually, there's a reason for that. With the old HUD-1 closing statements, no two lenders filled them out the same and interpreted it "their way". With the new "settlement statement" forms it's actually gotten worse. There is no fixed format like with the HUD-1 closing statement. That makes for inconsistent terminology and convoluted math. For example, points are basically pre-paid interest on the mortgage and are deductible. But "origination charges" can include points, and other charges that may or may not be deductible. So if you think the HUD-1 was confusing before, it was a piece of cake compared to some of the so-called "simpler" settlement statements.

The industry changed the form with the supposed intent of making it easier and simpler to understand. It backfired. All that really needed to be done was to provide clearer guidance and definition of the existing HUD-1 forum to mortgage lenders, and require them to follow it in a more uniform and standardized manner.

With the new statement, it can be such a nightmare that you have to sit down with your loan officer and get clear definitions *in writing* of just exactly what each charge is and what it includes. Otherwise if audited, the absurd vagueness of the new form leaves you at the mercy of what the IRS says it is.

Re: Home Purchase Settlement Statement

vunruh — Fri, 12 Feb 2021 20:15:14 GMT

Is the daily interest on the Settlement Statement included in the 1098? If not how and where do we enter that?

Re: Home Purchase Settlement Statement

msimsalston — Wed, 13 Apr 2022 05:36:33 GMT

Thank you so much!