Open TurboTax

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
Your taxes, your way. Get expert help or do it yourself. >> Get started
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

cancel
Showing results for 
Search instead for 
Did you mean: 
realtybymarion
New Member

ARe buyer paid closing costs for seller deductible?

Buyer is paying a portion of the seller's closing costs, is it deductible?

1 Reply
Coleen3
Intuit Alumni

ARe buyer paid closing costs for seller deductible?

It depends which they are. Here are some excerpts from Pub 530 regarding closing cost divisions.

  • Points paid by seller.
  1. If you bought your home after April 3, 1994, you must reduce your basis by any points paid for your mortgage by the person who sold you your home.
  2. If you bought your home after 1990 but before April 4, 1994, you must reduce your basis by seller-paid points only if you deducted them. See Points , earlier, for the rules on deducting points
  • Items not added to basis and not deductible.

  1. Fire insurance premiums. 

  2. Charges for using utilities or other services related to occupancy of the home before closing.

  3. Rent for occupying the home before closing.

  4. Charges connected with getting or refinancing a mortgage loan, such as:

    1. Loan assumption fees,

    2. Cost of a credit report, and

    3. Fee for an appraisal required by a lender.

  • Division of real estate taxes.
  1.  For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. You (the buyer) are treated as paying the taxes beginning with the date of sale. This applies regardless of the lien dates under local law. Generally, this information is included on the settlement statement you get at closing.
  2. You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. You each can deduct your own share, if you itemize deductions, for the year the property is sold.

https://www.irs.gov/publications/p530#en_US_2017_publink100011841

About Community

Learn about taxes, budgeting, saving, borrowing, reducing debt, investing, and planning for retirement.

3.49m
Members

2.62m
Discussions

Manage cookies
v