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| *Ostroff, Fair and Company>>>United States Taxes |
Are closing cost on a home tax deductable? |
Are closing cost on a home tax deductable? No. Only interest, points and property taxes are deductible. Most of the "fees" paid when closing on a house are not deductible.Points and Origination Fees are the only part of closing costs that are deductible from State and Federal Income Taxes. Pre-paid interest, and real-estate taxes which are paid at closing are also deductible from your State and Federal Income Taxes. Interest and property taxes are deductible in the year they're paid, on your federal return, if you itemize. Points are also deductible in the year of payment on a home purchase, but not on a refinance - on refi, the points have to be spread out over the life of the loan. The rest of closing costs aren't deductible whether it's an original mortgage or a refinance. Deductibility on state returns varies by state, since each state has its own laws. In PA, for example, none of the above is deductible. Points and prepaid interest are deductible. Those should show up on the Form 1098 form the lender so make sure you don't take a double-dip on that! Points on a re-fi ARE deductible but must be spread out over the life of the loan. If the loan is retired early either with another re-fi or a sale, you can take any remaining points at that time. The remaining closing costs (except escrow deposits for property taxes and insurance) are added to your cost basis and will reduce your gain when you sell. If you have a taxable gain at sale time they will reduce your tax then. Only at such time as you sell your home, and this would be against any capital gain. good luck imho - mucho tax experience |
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