Refinance expense deduction on personal property.?

Question

We have refinance our personal home and we had to pay points which I will deduct the points on Sch A but we also paid other expenses such as escrow fees, title fees, loan origination fees. Can we deduct these fees as well and which form should we use ... thanks

Answer 1

Sorry, but only your points can be deducted. And just to let you know, points on a refinance have to be written off over the life of the loan. If you took out a 30 year loan for your refinance you'd have to write off the points paid over 30 years.

Answer 2

The things that you deduct on your tax return, on Schedule A from a refinance are on the Settlement (or HUD-1) Statement. These would include the prorated interest, and the prorated property taxes (the impound account items). The escrow fees, and the other multitude of fees and expenses you see are not deductible - rather they are added to the cost basis of your property, and therefore reduce the gain when you sell - so be sure to hang on to the paperwork.

http://www.irs.gov/pub/irs-pdf/p530.pdf pages 4-6 and http://www.irs.gov/pub/irs-pdf/p936.pdf are very helpful.

Loan points are amortized over the life of the loan. (If you have a tax software program it should ask you questions about the points/loan origination fees and calculate it, otherwise, just divide the $ of points by the # of years on the loan, and that would be how much you deduct each year.)

When you refinance again, the remaining points would be deducted in their entirety at that time.

However, there is an exception.

If you did a "cash out" refinance and used some of the funds to improve your primary residence, a portion of the points are deductible in the year you paid them. That portion is related to how much of the loan was used for home improvement. If you obtained a $200,000 loan and $50,000 was used for home improvement, then one-fourth of the points are deductible in the year you obtained the loan.

If you were paying the points to buy (not refinance) your principal residence, your points would be fully deductible as an itemized deduction on Schedule A.

I do taxes for a living and still need to read up on the details every now and again myself. Remember, taxes can be very complicated and it usually pays to have a professionals assistance. (And I DON"T mean a national tax service - yikes!)

Good luck!

Answer 3

No, you can't deduct the other fees. And on a refi, the points have to be spread across the time of the loan, not deducted all at once in the year of the refi.

Answer 4

the advantages and breaks are actually not the comparable as a huge-unfold place of abode. they could be extra useful, finding on your father and mom undertaking. i could additionally advise which you push the concept that this might properly be a 2d domicile fairly than an investment property. In specific situations you may declare your father and mom as dependents. In different situations you may deduct costs and the fee of offering help on your father and mom in spite of in the event that they don't stay with you. A tax representative or CPA might desire to furnish you the terrific run down.