We bought another home out of state last year. Will any of the closing costs be deductible?

Answer 1

Closing costs get added to the basis of the property so you get the tax benefit when you sell.

Points for purchase of property are treated as interest and can be deducted on schedule A in the year you pay them, provided your total acquisition debt for all properties is no greater than $1,000,000.

Answer 2

Some closing costs are added to the basis. Closing costs that represent taxes or interest paid are deductible. A second home is treated the same as a main home for MOST tax deductions. I don't think the capital gain exclusion applies.

Answer 3

Better read the IRS publication(s) and your Schedule A/B instructions. I'm not sure if points paid for mortgage on 2nd home are deductible as they are for primary residence but they might be. Real estate taxes may also be deductible.

It may also depend on whether you will be using 2nd home for bona fide rental property as well as your vacation home. If you rent it out enough weeks of the year a lot of expenses are deductible.

This answer should also be pretty easy to find on the web.