Having trouble figuring out how to go about deducting my refinancing costs.

[darren-hawthorne]

I just refinanced my home this year and trying to figure out what I can deduct if anything at all. It is a normal refi, so I know that means if I can deduct, it will have to be amortized.  I didn't pay points in the form of prepaid interest.  However, I'm having trouble figuring out if any of my other costs are deductible.  For example: Appraisal fee, credit report, doc prep fee, flood certification, and title costs (electronic recording fee, lender's title insurance, notary fee, not yet due/payable, T19 endorsement, T30 endorsement, T36 endorsement, Tax certificate, TX Guaranty fee).

[Opus 17]

None of that is deductible.  You can add it to the cost basis of the house, which may reduce your capital gains when you sell.

The only things deductible are the list below, but they may apply differently to a refinance, especially the property tax item since the seller's credit won't apply here.

Most closing costs are not deductible.  Instead, they are added to the cost of the house and may reduce your capital gains when you sell.  These closing costs are deductible in the year you closed (2016):

1. Daily mortgage interest from the day you closed to the end of the month.  Shown on your closing document, this interest may not be included on your 1098. You can add it if it wasn't included. 

2. Property taxes.  Generally, the seller has prepaid a year's worth of property taxes and you will give a credit to the seller for the amount of tax that is allocated to the days you will own the home.  That property tax credit is deductible as if you paid it directly to the city or county.

3. Mortgage insurance premiums.  If you paid a lump sum premium for mortgage insurance from the VA or the Rural Housing Authority (called a funding fee) that is deductible in the year you close.  Other lump sum mortgage insurance premiums must be spread out over 84 months and deducted when you make your monthly mortgage payment.  (If you made 5 payments in 2016, deduct 5/84th of the lump sum).  These allocated amount are supposed to be included on your 1098 but if they aren't, you can add them yourself.  You will need to keep track of the 84 month allocation because Turbotax does not.  Also, mortgage insurance also has an income limit so not every one will qualify.

4. Mortgage "points." Origination fees or points are considered a form of mortgage interest and must be deducted over the life of the loan, unless you meet certain tests.  If you paid points, turbotax will ask you questions to see if you can deduct them all at once (in the year you closed) or if you have to spread them out.  Origination fees are considered points if they are a percentage of the loan amount (not a flat fee) and if they are not assigned to any specific services like document processing, attorney fee, or other specific costs.