can you write off your closing cost on the purchase of a new home?

Question

is the closing cost on the purchace of your new home a write off?

Answer 1

Not really - at least not in the way that you mean...

The interest you pay on your mortgage is the tax deductible portion that you are looking for. The points you pay when you get a loan are a form of prepaid interest, so they are deductible if they wen to buy down the rate. Prepaid interest is also deductible in this way. The other costs are not deductible WHEN YOU BUY A PROPERTY. However, when you sell a property there are other taxes...

The cost to buy and cost to sell are deductible from the gain on a home when you sell it. So NEVER throw away your closing statement. It may come in handy when you sell. If you are talking about your primary residence, then this may not do you much good, as you have a $250,000/$500,000 exclusion anyway - but if the property is a rental before you sell it then you may need the write off then...

Answer 2

The IRS is always suspicious of anyone filing a claim to deduct expenses of a home office. Be sure you follow the rules. Closing costs are not deductible, except for pre-paids (interest and property taxes) or points.

Answer 3

Only the portion that is points (lowering your interest rate) and prepaid interest (usually allowing you to "skip" the first month's payment.) These amounts will be provided to you on a 1099 from your mortgage company. Other costs, like appraisal and title company fees, are not deductible.

Answer 4

I am not sure, I add the closing cost into the purchase price and deduct it at the time of sale so I am not taxed on it. Closing cost is paid with tax-able income, so the amount of the closing cost is part of your net tax-abe income.