From Memphis, TN


Dear TaxMama:

I bought a new home in 2000. Can I deduct any of the costs? Such as closing fees, or interest I have paid, any improvements I had to make, etc? Also, if I bring work home with me or my telephone is used for my company's business, can any part of my phone bill be deducted?

HoboLady
Hi HoboLady

One of the joys of home ownership is that you can deduct the mortgage interest and property taxes you pay, on your Schedule A. http://ftp.fedworld.gov/pub/irs-pdf/f1040sab.pdf

In the first year of the purchase, you've often had to points. Those are also deductible. Most lenders will put the amount of the points on a 1099. If not, look at your escrow closing statement for the information.

As to the other closing costs ... generally, there is also an adjustment for property taxes - look for that, too.

The rest of the closing costs simply get added on the your cost of the purchase. Keep a copy of that closing statement in your permanent file about the house.

Oh, what permanent file?

Why the one you are creating right now - make it an accordion file - one with lots of pockets. I like the ones with the alphabetical dividers. (At least get the ones with three of four dividers) In there, drop all of your purchase documents, repairs and maintenance receipts.

I like to use some of those pockets for the home insurance policy and appliance warranty information.

You'll need them someday ... so, they're good to have on hand incase of an emergency.

As to taking a deduction for office in home ... probably not. It sounds like a sporadic thing you're doing - not a requirement of the job - for your employer's convenience. Read this - it'll help. Publication 587 - Business Use of Your Home

Best wishes,
Eva Rosenberg