Are the expenses deductible in 2019 for home sale expenses? If we obtained a construction loan to build new house in 2019, are the interest payments deductible in 2019?

[HelenC12]

Fees and Closing Costs (settlement fees) are added to the basis of your home and not a deduction per se like mortgage interest or property taxes. See the information below.

Yes, mortgage Interest on a construction loan may be tax deductible if you itemize and meet the IRS loan limitations. TurboTax will determine how much you may be able to deduct.

• Per IRS Publication 936 page 4: Home under construction. You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. The 24-month period can start any time on or after the day construction begins. 

If you sold a qualified home, you can make deductions up until the time you sold your home, which includes mortgage interest, mortgage insurance, points and real estate/property taxes. You should be able to see these on the 1098 from your lender.

You can also deduct:

• Home improvement costs (which are more or less permanent changes to the house and not the same as repairs and maintenance)
• Mortgage interest and/or real estate/property taxes charged at closing (other than that, almost no closing costs are deductible)

Some settlement fees and closing costs you can include in your basis are:

• Abstract fees (abstract of title fees),

• Charges for installing utility services,

• Legal fees (including fees for the title search and preparing the sales contract and deed),

• Recording fees,

• Survey fees,

• Transfer or stamp taxes, and

• Owner's title insurance.

Look at Selling Your Home by the IRS for more in-depth information.

[khatch365]

If I went to settlement on my lot  in 2018 to build my new house, can I deduct the closing costs on my 2019 tax return since I obtained a construction loan in 2019?

[Critter-3]

No they are never deductible ... they add to your cost basis as the answer above your post ....

Fees and Closing Costs (settlement fees) are added to the basis of your home and not a deduction per se like mortgage interest or property taxes. See the information below.

Yes, mortgage Interest on a construction loan may be tax deductible if you itemize and meet the IRS loan limitations. TurboTax will determine how much you may be able to deduct.

• Per IRS Publication 936 page 4: Home under construction. You can treat a home under construction as a qualified home for a period of up to 24 months, but only if it becomes your qualified home at the time it is ready for occupancy. The 24-month period can start any time on or after the day construction begins. 

If you sold a qualified home, you can make deductions up until the time you sold your home, which includes mortgage interest, mortgage insurance, points and real estate/property taxes. You should be able to see these on the 1098 from your lender.

You can also deduct:

• Home improvement costs (which are more or less permanent changes to the house and not the same as repairs and maintenance)
• Mortgage interest and/or real estate/property taxes charged at closing (other than that, almost no closing costs are deductible)

Some settlement fees and closing costs you can include in your basis are:

• Abstract fees (abstract of title fees),

• Charges for installing utility services,

• Legal fees (including fees for the title search and preparing the sales contract and deed),

• Recording fees,

• Survey fees,

• Transfer or stamp taxes, and

• Owner's title insurance.

Look at Selling Your Home by the IRS for more in-depth information.

[Opus 17]

Any costs that would be tax deductible are only tax deductible in the year they are actually paid.  On an empty lot, the only costs that are tax deductible are your property taxes. Many of your other closing costs add to the cost basis but are never deductible.