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What 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.
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.
Whilst 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.
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