Today TaxMama hears from Manny from the Tax Parlor has a question, “On the 1040, Schedule A, where do I put my closing costs?”
You can’t deduct your closing costs.
However, some of the costs on the HUD statement that you may deduct include property taxes that were paid in escrow and mortgage interest.
Only be careful. Sometimes page 2 shows property taxes you’re paying, but page 1 shows property taxes you have to pick up as income because the seller (or buyer) paid them earlier.
Also, while they look like property taxes you’d like to deduct – the taxes paid into a mortgage impound account aren’t deductible.
You would deduct property taxes in the TAX section of the Schedule A.
As to the interest – it’s probably already included the Form 1098 the bank sent you. So you probably can’t deduct that.
And if you are the buyer, you may deduct the costs of points in the interest section of Schedule A. If you are refinancing, you’ll have to amortize the points over the life of the loan. It will still end up in the same area, but you’ll be able to deduct 1/30 (for a 30 year loan) or 3/360 if you’ve had the loan for 3 months out 360 – you get the idea.
Most tax software has a place for you to enter this.
I hope this helps.
And remember, you’ll find answers to lots of questions about closing costs and other tax information, free. Where? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
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