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Home refinancing tax breaks

1:51 PM, Mar 25, 2013   |    comments
(Photo: Paul J. Richards, AFP/Getty Images)
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USA TODAY

With about weeks to go to file your 2012 tax return, you probably have questions. Whether you prepare your own tax return or pay someone to do it for you, we are here to help. Every day until April 15, members of the American Institute of Certified Public Accountants have agreed to answer tax questions from USA TODAY readers. Submit your questions to taxadvice@usatoday.com.

Today's question:
Q. My husband and I refinanced our home in November and paid close to $10,000 in closing costs. Is any of that deductible? I never received a tax form, just our HUD settlement statement. Please help as we don't want to lose out on any deductions.

A: There are several items on a closing statement from the refinancing of a residence that may be deductible.

Often, interest expenses for the period between refinancing and the first mortgage payment are included on the closing statement. These should be reported on the Form 1098 you received from the lender but it is always a good idea to double-check.

The refinance statement may also include mortgage points. On a refinance, points are deductible over the term of the loan.

The statement may also include real estate taxes, which may be deductible.

Normally all other costs are added to the basis of the residence, which can help when you sell the house.

Teri E. Newman, CPA,
Plante Moran, Chicago

For more information:
Publication 530: Tax information for homeowners 
Publication 936: Home mortgage interest deduction 
Publication 523: Selling your home

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