Can I deduct mortgage closing costs?

by TurboTax•921• Updated 3 months ago

Mortgage closing costs are the fees associated with securing a mortgage when you buy or refinance a property. Your total closing costs depend on the home’s purchase price, your loan type, and your lender.

What are some examples of closing costs?

Closing costs are divided between you and the seller. As the buyer, your portion of the costs may include:

Lender fees
Loan underwriting fees
Mortgage discount points
A mortgage insurance premium

You can find your mortgage closing costs in the loan estimate and the closing disclosure.

Which closing costs are deductible?

For your primary or secondary home, the only deductible closing costs are home mortgage interest and certain real estate taxes. These deductible costs generally include:

Real estate taxes paid at closing
Mortgage interest paid when the cost was settled
Interest paid at the house’s purchase
Loan origination fees, known as “points”

Note: Other costs are deductible when refinancing your rental property.

Which fees and costs can I add to the basis of my property?

You can add other settlement fees or closing costs to the basis of your property. This way you’ll get credit for those costs when you sell the home. These base adjustments include:

Abstract fees
Charges for installing utility services
Legal fees
Recording fees
Surveys
Transfer taxes
Title insurance
Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions

To deduct your mortgage closing costs in TurboTax, go to the Deductions and credits section of your federal return and select Start next to Mortgage Interest and Refinancing (Form 1098). If you have multiple 1098 forms due to refinancing, ensure they’re first entered correctly.