Everyone has heard about the dreaded closing costs when purchasing or refinancing a home. You’re considering how much to put down on the house, figure out your numbers and then remember those lingering closing costs and have to rethink and factor those into the equation.
Well, what if we told you that you could deduct some of those pesky purchase/refinance costs?
Here are some scenarios where the costs would be deductible:
- Interest paid at the time of purchase: this involves the closing cost interest up to the date of the first payment
- Your real estate taxes
- Origination fees/points shown as a percentage of the amount borrowed, the implementation of this can vary if it’s a refinance
- Private mortgage insurance costs
So, as you can see, there are perks of those pesky closing costs when it’s tax-time. However, don’t try any funny business on deducting taxes on:
- Title fees
- Real estate commissions
- Appraisal costs
- Home inspections
- Documentary stamps
- Credit report costs
- Costs of an abstract
- Transfer taxes
- Flood certificate
- Attorney fees
When you’re looking at those tax documents be sure to add your deductions under Deductions and Credits for Your Home. And don’t get too down about those closing costs, just think about the tax time deductions!
* Always consult a tax professional to ensure accuracy and compliance with all state and federal laws.
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