We purchased our primary residence this past year (June 2013) via FHA and was wondering what closing costs from the HUD-1, page 2, document are tax deductible. Correct me if I'm mistaken but from what I've researched "Adjusted Origination" charges (line item 803) and Daily Interest Charges (line item 901) are deductible and "Appraisal" fees (line item 804), "Credit Report" fees (line item 805) and "Flood Certification" charges (line item 807) are NOT. The main one I am questioning is line item 902, "Mortgage Insurance premium to US Dept of HUD", under the "Items Required by Lender to Be Paid in Advance" section. I've seen advice to take that amount, divide it by 84 and multiply it by the number of mortgage payments paid during the course of the year. Is that correct or is the total amount paid deductible in this year's taxes since the cost was incurred this year? Thanks.
Most expenses at closing on the purchase or refinance of a home are added to the cost of a new home. There are a few exceptions - the following would be deductible:
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. are not deductible, but are added to the cost of the property.
Mortgage interest, refinancing, property taxes and mortgage insurance are all under the Deductions and Credits tab for "Your Home."
Most expenses at closing on the purchase or refinance of a home are added to the cost of a new home. There are a few exceptions - the following would be deductible:
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. are not deductible, but are added to the cost of the property.
Mortgage interest, refinancing, property taxes and mortgage insurance are all under the Deductions and Credits tab for "Your Home."
Most closing costs on the purchase of a home are not deductible. The one exception is points you pay to reduce your interest rate and the real estate taxes you might pay upfront, and possibly property taxes that are paid at closing.
But keep good records. Many other settlement fees and closing costs for buying the property become additions to your basis in the property.
Please see this LendingTree article. Closing Costs That Are (and Aren’t) Tax-Deductible
Also see IRS publication 530 Publication 530 (2021), Tax Information for Homeowners - IRS