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What expenses can I deduct from purchasing my first home?

July 16, 2001


Date:  02 Feb 2001
From:  Vincent White

I am a first time homeowner. I incurred expenses to buy the house such as appraisal fee, home inspection fee. Additonally, I received a settlement statement from the escrow company showing additional fees. Am I able to deduct this as a deduction on Schedule A? If so, what line do I use? What about the closing costs that I incurred? Are they tax dedcutible as well? Thanks for your help!!

Answer

Date:  09 Feb 2001

Hello Vincent,

Sorry, but the only items that are deductible with respect to your residence are your mortgage interest, any points relating to getting the mortgage (which should be reported on Form 1098 with mortgage interest), and your property taxes.

Most of the other closing costs are added to the tax basis or "cost" of the home.

Be sure to keep your escrow statement as a permanent record of your purchase costs.

Good luck!
Mike Gray

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IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

What expenses can I deduct from purchasing my first home?

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