Yes and No. There are some closing costs that you can deduct (regardless of whether you took the home sale exclusion).
Deductible closing costs 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.
To enter these items in TurboTax, please follow these steps:
- Click on Federal Taxes > Deductions & Credits [In TT Self-Employed: Personal > Deductions & Credits > I'll choose what I work on].
- Scroll to the Your Home section and click on the Start/Revisit box next to Mortgage Interest, Refinancing, and Insurance.
- After finishing you will be brought back to the Wages & Income screen, where you can then click Start/Revisit next to Property Taxes.
Most of the closing costs on a home purchase or sale, are not deductible (again, regardless of the home sale exclusion). Instead, they are:
- added to the cost (basis) (when buying the home); or
- subtracted from the sales price of the home (when selling)
This will reduce any gain when you sell the house down the road.
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.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
