House closing what under origination fees deductible? attached scrreen shot

[amar_r]

[Mike9241]

none. and they don't add to your tax basis.

[amar_r]

what about this prepaid mortgage interest in closing statement, original loan sold to another lender and not included in their 1098 form

[VictoriaD75 · Accepted solution]

None of the origination charges in your first screenshot are deductible. If the mortgage was for the purchase, the prepaid interest, or points, are deductible in the year paid. If it is for a refinance, they must be capitalized and deducted over the life of the loan.

@amar_r 

[Opus 17]

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@amar_r wrote:

what about this prepaid mortgage interest in closing statement, original loan sold to another lender and not included in their 1098 form

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Yes, pre-paid interest is deductible on your return even if it is not included in the 1098 from your lender.  You can add it as a second lender and check the box for "I did not get a 1098 for this interest."

[Opus 17]

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@Mike9241 wrote:

none. they add to your tax basis.

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No, they don't.

Costs that add to your cost basis are costs that you pay even if you bought the house in cash.  This can be things like a county transfer tax, land survey, and owners title insurance.  Costs that you only incur because of a mortgage (like bank application fee, appraisal fee, bank's title insurance, etc.) are not deductible AND not additions to basis.  "Points" may be deductible as mortgage interest if certain rules are followed. 

[Opus 17]

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@amar_r wrote:

what about this prepaid mortgage interest in closing statement, original loan sold to another lender and not included in their 1098 form

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Also, in addition to the interest adjustment, you probably paid a property tax adjustment.  That is considered deductible property taxes as if you paid them directly to the taxing district.  For example, in my state, property taxes are due in February for the period January-June, and a second payment is due in July for the period July-December.  If I buy a house in September, I will reimburse the seller for taxes they paid in July that cover my days of ownership from Sept to the end of the year.  I can deduct those taxes as if I paid them to the town. 

[Mike9241]

what do you think is wrong? I see they don't add to basis and are nondeductible.