ducha@ihuxu.UUCP (D.K.Nguyen) (03/01/84)
I have a question (maybe more) regarding the cost of purchasing a home which is tax-deductible. We recently bought a home, and knew that the "points" we paid to close the home can be written off as pre-paid interest of our loan. However, there are other cost such as tax paid by the seller on our behalf, appraisal fee, stamps, some insurance for the months that we did not live there, lawyer's fee, etc. We're sure that a lot of netnews-readers out there have been through this agony before, could you give us some tips on what is the best method of going about writing off these cost (in itemized deduction or capital gain/loss or whatever) ? Also in the event that after one moves into the home and some months later found out that the heating system does not work, and spends a fortune to fix it, can one write it off as cost of purchasing the home or not ? Duc Kim Nguyen ihnp4!ihuxu!ducha -- Duc Kim Nguyen ihnp4!ihuxu!ducha
stewart@ihldt.UUCP (R. J. Stewart) (03/01/84)
A small point, but one which might come back to get you one day, is that you shouldn't refer to mortgage points as "prepaid interest". Points are deductible in the year that you pay them. Prepaid interest is different, however, and deductions must be spread over the life of the loan. The example of prepaid interest given in Lasser's Tax Guide involves someone who needs a deduction in a particular year, so takes out a loan and pays all the interest up front. This person would not be allowed to take the entire interest deduction that year; they could only take the amount they would *normally* have paid. BTW, Lasser's answers a lot of the questions you asked about deducting house expenses. All the usual disclaimers about not being a tax attorney, etc. Bob Stewart