Legal Question in Tax Law in New Jersey

Re: tax deduction

I concur with Ray. Most costs incurred by the Buyer are not deductible, but are added to your cost basis for the house. Deductible costs include mortgage interest prepayments, any taxes paid in advance or reflected as adjustments, mortgage points (although they may have to be amortized and may not be fully deductible in the year of purchase), and legal fees for tax advice. Most Seller costs are not deductible either, but become basis adjustments for determining gain (a loss on the sale of a personal residence is not deductible), but again some costs are deductible, such as real estate taxes paid, interest on a mortgage payoff, and legal fees for tax advice. If I could see a copy of the closing statement, I could be more specific. This is a reply to an Internet question and the response is not intended to be legal advice or as creating an attorney-client relationship.

Re: tax deduction

Some purchasing closing costs are deductible in the year of the closing... legal fees for tax advice, some mortgage points; mortgage broker fees are not deductible. Some seller costs are already calculated in your 1099-S. In any year when you purchase or sell a home, you should consult with an attorney to have your taxes properly prepared (plus, the tax preparation cost is deductible). Do not rely on a sales people for tax advice.