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New Member
posted Jun 4, 2019 6:54:55 PM

Borrowed money and financed Home. Can we claim closing costs

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1 Best answer
New Member
Jun 4, 2019 6:54:57 PM

Most expenses at closing on the purchase or refinance of a home are added to the cost of a new home.  There are a few exceptions - the following would be deductible:

  • interest paid at the time of purchase (the charge at closing would normally be done for interest up to the date of first payment.),
  • real estate taxes charged to you,
  • points (sometimes called origination fees and expressed as a percentage of the amount borrowed.)  On a refinance they need to be amortized over the life of the loan or 84 months, whichever is less, unless the points were used to improve your main home.

You can take these deductions even if you borrowed the money to pay them as long as you are legally obligated to repay them.

2 Replies
New Member
Jun 4, 2019 6:54:57 PM

Most expenses at closing on the purchase or refinance of a home are added to the cost of a new home.  There are a few exceptions - the following would be deductible:

  • interest paid at the time of purchase (the charge at closing would normally be done for interest up to the date of first payment.),
  • real estate taxes charged to you,
  • points (sometimes called origination fees and expressed as a percentage of the amount borrowed.)  On a refinance they need to be amortized over the life of the loan or 84 months, whichever is less, unless the points were used to improve your main home.

You can take these deductions even if you borrowed the money to pay them as long as you are legally obligated to repay them.

Level 15
Jun 4, 2019 6:54:58 PM

Home Ownership


There is not a first time home buyers credit on a Federal return. That ended in 2010. If your state has such as credit, you will be able to enter it when you prepare your state return.

Buying a home is not a guarantee of a big refund.  Your deductions for homeownership combined with your other deductions (if any) must exceed your standard deduction to change your tax due or refund. If you purchased your home late in the year, you do not even have a full year of home ownership deductions.

Your closing costs on your new home are not deductible except for prepaid interest, prepaid property tax or loan origination fees.  There are no deductions for appraisal, inspections, title searches, settlement fees. etc.

Your down payment is not deductible.

Your homeowners insurance for fire, hazard, flood, etc. is not deductible for your own home.

Home improvements, repairs, maintenance, etc. for your own home are not deductible.  

Homeowners Association  (HOA) fees for your own home are not deductible. 

Go to Federal> Deductions and Credits> Your Home to enter mortgage interest, property taxes, and loan origination fees (“points”) that you paid in 2017.  You should have a 1098 from your mortgage lender that shows this information.