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Closing Costs - Get to Know them Better

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By : Flynna Jones    99 or more times read
If you have just bought your dream house, you might be thinking about the closing expenses related to home buying and how much amount you have to produce in order to pay them off. These costs are categorized into two parts, those that are paid by the seller and paid by the buyer. These will be based according to the agreement of the two parties involved. When you choose to have your home be constructed, you will have to incur a big amount of money once you are done with your loan or maybe before the land buying process.

Usually, those closing costs that are deducted from tax are termed as real estate taxes, pro-rated property taxes, mortgage points and mortgage interest. You settled all these expenses during closing even most of them are actually not part of the closing procedure. The ideal way you can claim these costs is, if you have done a tax return that shows all the items that you have paid for. Remember to avail these deductions during the same year that you have bought the house.

Unfortunately, all the things you have spent during the closing will not be deducted from the tax. These are just the figures that you have to settle in the whole home buying process. However, these fees add up to the tax basis of your house and will then be included only when you decide to sell the house.

The items that can be included in the tax basis of your property are charges for the title, legal charges associated with the preparation of the important papers and the deed, costs on the title search, transfer tax, surveys, charges for utility installation, insurance and fees for the recoding procedure. In addition to that, any amount owed to the seller which you have agreed to pay at closing such as commissions, costs for repairs, mortgage fees and a lot more.

You can only avail the tax benefits when you have finalized your decision on selling your house. The sum of all expenses can help you evaluate if you have gained or loss in a certain deal. Everything will be deducted from any amount of the profit. And this can surely have an impact on your capital gain.

For those times that are not included on the tax deductions are the rent you have paid prior to closing, fire insurance premiums, charges for the appraisal procedure, fees on your credit report and anything that you have encountered before closing.

If you have decided to dispose your house, be sure to seek help from any expert in real estate to guide you in every move you make. Home buying process needs a huge amount of money and thus you have to be wary to prevent from getting into trouble later on.
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