Once you officially become a property owner, you should keep good records for tax purposes. As we discussed previously, owning a home is one of the last middle-class tax shelters. Your closing documents contain valuable tax deductions. Make sure you save an extra copy of your closing statement for your tax accountant. Here's a quick summary of what's deductible and what's not:
real estate taxes paid by you at closing
interest expense paid by you at closing
points paid (subject to some limitations)
homeowner's insurance premiums*
water and sewer charges*
prorated oil or other utilities*
other expenses of a personal nature*
Other items on your statement may add to the tax basis of your home. Some of these items are:
title search and survey
* These items may be deductible if you are purchasing investment property. Contact your tax professional for details.
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