Taxes Q & A- I purchased a rental property last

I purchased a rental property last year. What closing costs can I deduct?

The only deductible closing costs are those for interest, and deductible real estate taxes. Other settlement fees and closing costs for buying the property become additions to your basis in the property. These basis adjustments include:

Abstract fees,

Charges for installing utility services,

Legal fees,

Recording fees,

Surveys,

Transfer taxes,

Title insurance, and

Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions.

Those costs that are basis adjustments can be part of your yearly depreciation deduction for the rental property.

For additional information, refer to Publication 527, Residential Rental Property, Publication 17, Your Individual Income Tax Guide, and Publication 535, Business Expenses.

References:

Publication 527, Residential Rental Property

Publication 17, Your Individual Income Tax Guide

Publication 535, Business Expenses

Source: www.irs.gov