Have a Tax Question? Ask a Tax Expert
Hello and thank you for using Just Answer
The following are some of the settlement fees and closing costs that you can include in the original basis of your home.
Abstract fees (abstract of title fees).
Charges for installing utility services.
Legal fees (including fees for the title search and preparation of the sales contract and deed).
Transfer or stamp taxes.
Owner's title insuranceThe above are not deducted in the yera you buy or refinance but added to your basis of the home.
The term "points" is used to describe certain charges paid to obtain a home mortgage. Points paid for refinancing generally can only be deducted over the life of the new mortgage. However, if you use part of the refinanced mortgage proceeds to improve your main home and the points were paid for the use or forbearance of money and were not a charge for services provided by the lender as part of a loan origination fee , you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds.
So I add them all and claim the total as "points"?
No, they are added to the basis of your home. They are not points. If you originally purchased your home for $100,000 and all those costs at closing come to $5000 then your home basis is now $105,000
Okay, I believe I understand. Thanks.
You are welcome