Which Home Buying Costs Are Deductible?
It's a good question, and one that should be examined fully: What home buying costs are deductible in your tax returns. Lets face facts, no one wants to pay more tax than they have to and seeking the advice of your realtor, attorney or, even better, your tax consultant or accountant, can help you get to grips with what is, and isn't deductible, in your taxes.
What's Deductible?
Firstly any points you, or the seller, pay to purchase your home loan is deductible in your income taxes for that year. Property taxes and interest, however, are deductible every year.
While other home-buying costs, which in particular include the closing costs associated with the home purchase, are not immediately (in the same year) tax-deductible, they can be eventually figured into the adjusted cost basis (the difference between the cash price and futures price) of your home when you go to sell your property. You should also know that any significant home improvements also could be calculated into your basis.
Fees that are included in the tax-deductible adjusted cost basis include many normal real estate fees. These fees include the following items.
Title insurance Loan-application fee Credit report Appraisal fee Service fee Settlement or closing fees Bank attorneys fee Attorney's fee Document preparation fee Recording fees.
However, you should understand that any points paid when you re-finance an existing mortgage must be deducted ratably over the life of the new loan.
