I purchased a rental property last year. What closing costs can I deduct?

By Jason Watson (Google+)

None. Just kidding. All kidding aside, only mortgage interest and qualifying real estate taxes may be deducted. Points associated with the value of the property are amortized and deducted over the life of the loan- Everything else such as legal fees, recording fees, surveys, title insurance, transfer taxes, etc. become additions to your cost basis, and are depreciated along with the value of the property excluding land. The costs of borrowing do not add to your cost basis since the IRS only allows additions to the cost basis as if you paid cash. Sorry.