You didn't say whether you were buying or selling the home.
Buying
Most of the closing costs on a home purchase are not
deductible. Instead, they are added to the cost (basis) of the home to
reduce any gain when you sell the house down the road.
Other examples of
closing costs added to the basis of the house are: title fees,
real estate commissions, appraisal costs, home inspections, documentary stamps,
credit report costs, costs of an abstract, transfer taxes, flood certificate,
attorney fees, etc.
Some closing costs
that are deductible include:
- 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.]; and
- private mortgage insurance costs
but, if prepaid, only the amount attributable to this year based on an 84
month amortization.
Selling
As with buying the home,most of the closing costs on a home sale are not
deductible. Instead, they are subtracted from the sales price of the home to
reduce any gain.
Deductible expenses are the same as when you are buying a home.
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