Need help with your taxes? USATODAY.com will publish a reader's question and the answer from a member of the American Institute of Certified Public Accountants (AICPA) every weekday until this year's tax deadline, April 17. Click here for a list of all the tax questions and answers. Today's question:
Q: What settlement closing costs are deductible, aside from property taxes and interest? Country transfer taxes, etc.?
Answer by AICPA member Andy Mattson: The deductible amounts depend upon whether or not the property in question is a rental property or a personal residence.
If a personal residence, in addition to property taxes and interest, points are deductible. Transfer taxes are not deductible but add to the cost basis of the property.
interest reflected on a purchase escrow statement is already included on a Form 1098 from the lender (so don't double up on the deduction). And, the limitations on home mortgage interest must always be taken into account. Interest on debt in excess of $1.1 million is non- deductible.
If a rental property, then transfer taxes are deductible. In addition, items such as hazard insurance and association dues are deductible in addition to interest. However, points must be amortized over the life of the loan.
In addition, you can find more information from the IRS:
Our accountants can provide general information and advice about tax issues. They will not know your entire tax situation, so go to your own tax preparer for detailed advice.