Anonymous asked in Business & FinanceTaxesUnited States · 1 decade ago

Can I use the closing costs of the home I purchased as an itemized deduction for my federal tax return?

4 Answers

  • 1 decade ago
    Favorite Answer

    Points for your mortgage are deductible in the year you close. They will be included on a Form 1098 (not a 1099 as another poster stated) that you should have received from you lender by now.

    Most of the other closing costs are added to your cost basis and will reduce your gain when you eventually sell. The costs attributed to prepaid property taxes and homeowners insurance are simply funds set aside for payment of a future debt and are not added to your basis.

    Property taxes get tricky. Money credited to the buyer must be SUBTRACTED from the property taxes otherwise paid in the year that you close as they are paid by the seller and you will pay them to the tax authorities for the seller's benefit. Property taxes credited to the seller should be ADDED to any property tax bills that you pay in the year that you close -- the exact opposite of the first situation.

  • 1 decade ago

    Only the points you paid on your loan. You will receive a 1099 from your lender showing the points and all interest paid (including prepaid interest in the closing costs) at the end of the year. Other closing costs are not deductible.

  • Erika
    Lv 4
    4 years ago

    in case you won't be able to upload, subtract, multiply and divide why did your severe college award you a level? Why did your state assist you pass the standardized tests? Accounting usually in reality calls for low degrees of math and better issue fixing skills. Your excuses are ignorant and don't have common experience in contact. what's so confusing about 55,000 x 7.5% - 5,six hundred ? so as that they exceeded the part by technique of $a million,475. The minimum is 55,000 x 7.5% or 4,one hundred twenty 5, so something previous that beats the part checks. i imagine you do not realize what it is your flaws particularly are. TRO - truly ? Textbooks typically do no longer use the present tables, additionally they have a tendency to mixture up and confuse you on objective by technique of creating use of distinctive tax years and dates in issues. She in no way stated which tax year the instructor gave her. it isn't a real taxpayer question. it truly is an academic homework question.

  • 1 decade ago

    I agree with Brian, but you can also deduct any real estate taxes that were prorated and charged to you at closing.

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