In general, when buying your new home, costs that can be considered taxes or interest are deductible.
The IRS classifies some expenses as interest that the average person doesn’t. You may be able to deduct more closing costs than you think.
Closing costs that are tax deductible include: Property taxes, Prepaid Interest, Points, Origination Fees and, Mortgage Insurance There are some non-deductible expenses that can still save you money when you sell your home. These expenses can be added to your BASIS (watch our video on that) which in turn reduces your Capital Gains.
When you sell or buy your home, some of the closing costs you can’t deduct but can save you money as a seller or buyer include:
• Title Search And Abstract Of Title Fees
• Utility Service Installation Fees
• Legal Fees
• Recording Fees
• Survey Fees
• Transfer Or Stamp Tax Fees
• Owner’s Title Insurance
You also can add these selling expenses to your BASIS:
• Real estate agent commissions
• Advertising expenses
• Legal fees
• Loan charges a seller paid on the buyer’s behalf
• Any other fees or costs you incurred to sell your home, such as staging fees
• Consult your tax advisor for full details. Information provided can be found on the IRS website