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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