When selling your home, it’s likely you’ll focus on the proceeds you’ll earn and the taxes you may need to pay. But there are expenses involved that may be tax deductible. In this post, we explore the question: Are closing costs tax deductible? Let’s take a look at which fees might qualify for tax deductions and which can reduce your capital gains taxes. When selling a home, you’ll encounter various closing costs as part of the process. On average, sellers pay between 2% and 5% of a home’s sale price in closing costs. If you count real estate agent commissions (technically not a closing cost), the percentage increases to a range of 6% to 10%. For perspective, the median home price in the U.S. ranges from $345,000 to $420,000, depending on the data source. If you sell your house for a mid-range price of $385,000, you can expect to pay anywhere from $23,100 to $38,500 in seller closing costs. Here’s a breakdown of some common closing costs sellers typically cover: Some other possible deductions at closing include: The answer is a mix: Some closing costs are tax deductible, while others are not but can reduce your taxable capital gains. Just before your closing date, you’ll receive a disclosure statement. This document provides a detailed breakdown of all your closing costs, showing how much will go to your mortgage lender, as well as the amount you’ll receive from the sale, either through a bank transfer or check. Carefully review this disclosure to ensure accuracy. If you have questions, reach out to your listing agent, attorney, or the closing company, and they should clarify any uncertainties. Now let’s break down this mixed answer to see exactly how some closing costs can be tax deductible.What are examples of seller closing costs?
Are closing costs tax deductible?
