Settlement Fees (Closing Disclosure Form)
Menu Path: Deductions/Credits > Itemized Deductions > Homeowner Expenses (1098)
If you bought a home, some of your settlement fees may be tax deductible. Real estate taxes and points found on your settlement statement are usually deductible on Schedule A as an itemized deduction. Mortgage interest shown on the settlement statement is typically already included in the Form 1098 you receive from your mortgage lender.
Other settlement fees, such as title fees, legal fees, and recording fees, are not tax deductible, but they are added to the cost basis of the home you purchased. Cost basis is important to keep track of if you ever rent your home or have a home office and take a depreciation expense on your home. Cost basis is also needed when you sell your home. Most home sales are tax-free unless depreciation has been taken in the past or if the gain is more than $250,000 ($500,000 if married).
If you bought a home, some of your settlement fees may be tax deductible. Real estate taxes and points found on your settlement statement are usually deductible on Schedule A as an itemized deduction. Mortgage interest shown on the settlement statement is typically already included in the Form 1098 you receive from your mortgage lender.
Other settlement fees, such as title fees, legal fees, and recording fees, are not tax deductible, but they are added to the cost basis of the home you purchased. Cost basis is important to keep track of if you ever rent your home or have a home office and take a depreciation expense on your home. Cost basis is also needed when you sell your home. Most home sales are tax-free unless depreciation has been taken in the past or if the gain is more than $250,000 ($500,000 if married).
