Home Buyer Closing Cost

[bookwarm1956]

Is any part of the closing cost elogible for tax deduction of credit?

[Critter-3]

Only your portion of the RE taxes you pay  and possibly the mortgage interest paid in advance if it is not already reported on the 1098 form you get in January.   All the rest are added to the cost basis of the home. 

[Carl]

Cost related to acquisition of the loan are deductible if this is a business loan (if you are buying rental or other business property) Example would include loan application fees, survey fee if the bank required it, and fees paid to the closing agent.

Realtor fees you may have paid are are added to the cost basis of the property.

Cost related to acquisition of the property are added to the cost basis of the property. Example would include the title transfer fee paid at the courthouse.

At the closing if you paid any property taxes they will be identified as such on the closing statement. Those are claimed/deducted "as" property taxes.

At the closing if you pre-paid any interest, those are claimed/deducted "as" such in the mortgage interest section.

At the closing if you pre-paid PMI (private mortgage insurance), sometimes shown on the closing statement as "MIP" then those are claimed/deducted in the mortgage interest section "AFTER" you check the box to indicate that you "did" pay PMI.

[Carl]

@Anonymous can you check me on the above? I'm not 100% confident I"m interpreting IRS Pub 530 correctly in the area of loan acquisition costs.

[M-MTax]

Expenses Added to Basis

• legal fees to obtain title to the home
• title search fees
• title insurance
• title recording fees
• transfer taxes
• survey fees.
• any expenses of the seller that you agree to pay

Nondeductible Expenses

• appraisal fees
• mortgage broker's commissions
• pest inspection fees
• credit report fees
• loan fees (not points)
• mortgage insurance premiums (unless the premiums qualify for a special deduction created under the Tax Relief and Health Care Act of 2006 which expires at the end of 2016
• commitment fees
• hazard insurance premiums
• homeowners' association fees
• utility fees