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Deduct Closing Costs on Taxes?
  #1  
Old 03-31-2020, 06:19 PM
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Default Deduct Closing Costs on Taxes?

Taxguykarl or others who prepare tax returns might be able to answer this better, but from a quick google search, it doesn't seem like this is actually a thing.

I got a call this morning from a former customer wanting to know what her closing costs were when she bought her house. I wasn't able to help her because she paid off the loan 15 years ago. I explained that we only keep paid loans six years. She asked the common question, "Where do I go to get this information?" You can't. We destroyed the file. If you don't have your copy, no one has it.

She said she sold her house last year, and her tax preparer told her she can deduct her closing costs from the purchase of her house. Which doesn't seem right to me. I didn't say it to her, but I think it's a miscommunication. Either they meant she can deduct costs from selling her house, or maybe closing costs from the purchase of her new house. But I'm not a tax preparer - what do I know?
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Old 03-31-2020, 06:44 PM
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I'm no tax professional either, but I can't imagine being able to deduct an expense from 15 years ago on current year taxes. I'd think that deduction would only apply in the year of that expense.
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Old 03-31-2020, 06:47 PM
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As a *thinking* layman, I'd put money on miscommunication. Something from 15 years ago isn't generally going to be anything relevant to current taxes. Closing costs on that mortgage would be further back than that, at least 5 more years, putting it well past even the oddball examples I've heard of things rolling on for.

The NEW house, yes, there's bound to be LOTS of stuff to deduct. Any repairs that she paid someone to do in the last year, yes. The starting costs on the old house, nope. That's just a really good way to get nasty audit results.
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Old 03-31-2020, 07:05 PM
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You can deduct points paid to lower your interest rate. It is basically viewed as paying interest in advance.
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Old 04-03-2020, 01:59 AM
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Sorry I've been away.
Now onto the question at hand: Yes some of the nickel-and-dime fees on a closing statement are deductible points (Schedule A, Line 8c). They would be deductible for the year of the purchase.
Yes, amended returns are an option, but only for three years back.
For the SC in the OP, way too late--too bad, so sad, sucks to be you.
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Old 04-03-2020, 01:15 PM
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Yeah. It sounds to me like it was a miscommunication. I'm a little surprised that she thought she could deduct closing costs from 15+ years ago, but then I've heard stranger things.
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Old 04-07-2020, 02:43 AM
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Quote:
Quoth Ghel View Post
I'm a little surprised that she thought she could deduct closing costs from 15+ years ago, but then I've heard stranger things.
So have I
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Old 04-07-2020, 11:29 AM
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Karl - While I haven't had to take advantage of this (*whew*), I was always under the impression that you have three years to file a (late) return, but that, once you have, you can theoretically amend it for an indefinite period of time after that. Is this not the case?
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Old 04-07-2020, 03:14 PM
Mental_Mouse Mental_Mouse is offline
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I know that when I discovered that H&R Block had screwed up 5 years worth of returns, the accountant they brought in to fix things said he could only refile the three previous years.
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  #10  
Old 04-10-2020, 09:56 PM
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Quote:
Quoth EricKei View Post
I was always under the impression that you have three years to file a (late) return,
You can file up to three years late (not recommended). If you owe for that year, you are on the hook for interest and penalties. If you have a refund coming, there is no interest to you. In past years, the IRS put out a press release in late March about refunds that will revert to the US Treasury if a return claiming those is not filed--those would be for the returns due three years earlier.
Quote:
Quoth EricKei View Post
... once you have [filed], you can theoretically amend it for an indefinite period of time after that. Is this not the case?
Not the case, sorry. Amended returns can only be filed for three years.
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