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RK8
New Member

I bought new home in 2017. I have closing document from title company. I couldn't find HUD.I have closing cost document . I want to know which i can use for tax deduction

I purchased new home in 2017. Got all closing documents from title company. I couldn't find HUD-1 but I have closing cost document which has cost break up.
My questions are
1. Can i use cost statement to find deductions?
2. Statement has loan  cost under that it mentioned origination charges, appraisal fees, title escrow fees and ALTA. Out of these which i can use for deductions?
3. Statement also has taxes and govt fees ( recording fees + city county tax stamps ), Prepaid for insurance premium + prepaid interest + prepaid property taxes for 5 months. which one out of this can i use for deductions?
4. Can i use prepaid property tax from closing document for deductions? 1098 shared by lender does not have that amount mentioned.
5. If i got realtor credit which i used for closing cost, can i still be able to use components closing cost for tax deductions?
1 Reply
PaulaM
Expert Alumni

I bought new home in 2017. I have closing document from title company. I couldn't find HUD.I have closing cost document . I want to know which i can use for tax deduction

1. Yes, you can use your closing document to locate some possible deductions

2. Lenders use an array of terms for points (discount points, origination charges, etc) Points only would be a deductible expense. A single point is 1% of the loan value.

3. Premiums, property taxes and interest held in an escrow account (they are not actually paid yet) do not count as a deduction. Escrow accounts hold amounts for a future payout to the taxing authority or your insurance provider).

4. You can can use prepaid amounts held in escrow, but you can deduct property taxes paid to the taxing authority for 2017.

5. Realtor rebates reduce your home's basis. You can't deduct them because you didn't pay them. This just lowered your out of pocket expenses for the home.

Other Items on closing disclosure form that may be deductible:

  • 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 - On a refinance they need to be amortized over the life of the loan; unless the points were used to improve your main home.

Other fees, such as commissions, attorney fees, preparation of deed, abstract fees, owner title insurance, recording fees are added to the basis of your home, and not deductible.

https://www.irs.gov/pub/irs-pdf/p936.pdf


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