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Posted: 12/7/2003 6:07:52 AM EDT
I have a question about what parts of closing costs can be deducted from our taxes. Can any left over amount that we may not recieve one year carry over and be gotten the next if we run out of witholding to apply it against? What if the closing costs are roled into the mortage?

SorryOciffer

Link Posted: 12/7/2003 6:21:16 AM EDT
Are you the seller or the buyer?
Link Posted: 12/7/2003 6:27:20 AM EDT
I will be the buyer. SorryOciffer
Link Posted: 12/7/2003 6:28:51 AM EDT
[b]Prefect[/b] is a CPA; IIRC........ Use TurboTax....[:)]
Link Posted: 12/7/2003 6:37:48 AM EDT
Gonna have to look at that Turbo tax as I have gotten alot of recommendations about it. Thanks, SorryOciffer
Link Posted: 12/7/2003 6:41:54 AM EDT
As a buyer, all reasonable closing costs can be deducted the first year of purchase on schedule A of your 1040. Costs in excess of reasonable have to be added into the basis of the house. Now what constitues "in excess of reasonable"? If you paid unusual points (because of a bad credit history for example), say 5 points, you would be expected to roll a part of that (everything over the going rate) into the basis. In reality, this never happens. You'd have to get audited for it to be found, and you'd still have an arguement as to what is reasonable. For all intents and purposes, deduct the closing costs. Hope this helps.
Link Posted: 12/7/2003 6:42:07 AM EDT
You should read the code yourself and find out. One thing we know to be true, according to the GAO, is that if you ask the IRS, CPA or Tax attorney they will give you the wrong information. It is documented in one of the GAO's reports Go to 26 CFR Sec 1.861-8, particularly Sec 1.861-8(f)(1). There the Secretary of the Treasury, who is responsible for defining the code, will tell you how to start your determination of taxable income. That is where you should start. Unless you start where the determination lies you will have made a mistake and it will usually result in you paying where you should not. This is the section that constitutional attorney's and successful tax consultants use.
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