Closing costs are a major expense when buying or selling a home. These costs can include everything from the real estate agents commission to title insurance. But are these costs tax deductible? The answer may surprise you! In this blog post, we will discuss the tax implications of real estate closing costs. We will help you determine whether or not you can deduct these expenses on your taxes. Let's get started!
Are All Closing Costs Tax Deductible?
The simple answer is no, not all closing costs are tax deductible. However, there are some closing costs that you can deduct on your taxes. These include:
- Property Taxes: If you are purchasing a home, you can deduct the property taxes that you paid at closing.
- Prepaid Interest: If you are paying interest on your mortgage, you can deduct the amount of interest that you paid at closing.
- Mortgage Points: If you pay points to get a lower interest rate on your mortgage, you can deduct those points on your taxes.
- Origination Fees: If you are paying an origination fee to your lender, you can deduct that fee on your taxes.
- Mortgage Insurance Premiums: If you are paying mortgage insurance, you can deduct the premiums that you paid at closing.
Closing Costs That Aren’t Tax Deductible
Not all closing costs are tax deductible, however. Some common closing costs that are not tax deductible include:
- Appraisal fees
- Credit report fees
- Home inspection fees
- Title insurance
- Attorney's fees
Purchasing a home is a major financial decision. Be sure to speak with your accountant or tax advisor to determine which closing costs you can deduct on your taxes. This will help you save money when you file your tax return.
We hope this blog post has helped you understand the tax implications of real estate closing costs. If you have any further questions, please feel free to contact us. We would be happy to help!
Hello! I'm Jay Thomas, a REALTOR in Houston, Texas. Chances are you and I share a similar passion, Real Estate! I also have a passion for building businesses, working out, inspiring others, technology, sports, and people. Connect with me on Facebook and Instagram!