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Financial Learning Center


The Closing

Tax Documentation

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:

Deductible

  • real estate taxes paid by you at closing
  • interest expense paid by you at closing
  • points paid (subject to some limitations)

Non-Deductible

  • 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:

  • brokers' commissions
  • attorneys' fees
  • recording fees
  • 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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