$2,000 and $10,000
You can deduct some closing costs on your federal tax return. When you purchase a home, you normally pay several expenses at closing. These closing costs include prepaid interest, called points, application and appraisal fees, title insurance and survey fees. The costs are charged by mortgage companies. Closing costs often add up to anywhere between $2,000 and $10,000. The Internal Revenue Service has rules that allow homebuyers to claim deductions on their federal tax returns for some closing costs. Generally, deductible closing costs are those for interest, certain mortgage points and deductible real estate taxes. Many other settlement fees and closing costs for buying the property become additions to your basis in the property and part of your depreciation deduction, including: 1  Abstract fees. Itemized Deductions. The first thing to understand is that you can only deduct home closing costs, or settlement fees, if you itemize your deductions on an IRS form 1040. So, if you file a 1040EZ, for example, you will not reap any tax benefits from your home closing costs. The only settlement or closing costs you can deduct on your tax return for the year the home was purchased or built are Mortgage Interest and certain Real Estate (property) taxes. These can be deducted in the year you buy your home if you itemize your deductions. Obtain an Internal Revenue Service (“IRS”) Schedule A. In order to deduct closing costs on your income taxes you must itemize your deductions on IRS Schedule A (“Schedule A”). You may obtain a Schedule A from the IRS website here: http://www.irs.gov/pub/irs-pdf/f1040sa.pdf.
http://homeguides.sfgate.com/claim-closing-cost-deduction-tax-return-6956.html https://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/Sale-or-Trade-of-Business,-Depreciation,-Rentals/Rental-Expenses/Rental-Expenses http://homeguides.sfgate.com/home-closing-costs-tax-deductible-2550.html https://www.taxslayer.com/support/475 http://www.wikihow.com/Deduct-Closing-Costs-on-Taxes
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