I purchased a rental property in 2007 and would like to know what are the expenses that I can include as part of the closing costs! Thank you!

A taxpayer incurs several types of closing costs that are associated with the purchase of his rental property. However, the IRS tax code specifically states that the only deductible closing costs are those "for mortgage interest and real estate taxes."

The other settlement fees and closing costs for acquiring the rental property become "additions to your basis in the property."

The IRS has provided a list of the other settlement and closing costs (that are additions to basis in the property) as follows:

* 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.

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

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.