Question

I would like to learn about the HUD-1 tax deductions for buyer of real estate. If I bought my first home this year, ware there any HUD-1 tax deductions that I would qualify for?

Answer

To figure the HUD-1 tax deductions for purchasers of real estate, you will have to itemize your tax return using 1040, Schedule A. The only HUD-1 tax deductions t are mortgage interest or real estate taxes. You can’t deduct any service fees.

You can fully deduct points you paid on a loan to finance the purchase of a main home in the year you paid them if all of these apply:

  • You used the mortgage to buy or build a main home that secures the mortgage.
  • The points paid must be based on a percentage of the principal amount of the mortgage.
  • The points must be a reasonable amount. Paying points must be an established practice for the area where the mortgage is made.
  • You must pay the points from your own funds — not from loan proceeds. If the points are tied to the mortgage, you must spread them over the life of the loan.
  • The points paid aren’t in lieu of other fees, like:
    • Appraisal fees
    • Title fees
    • Attorney fees
  • The points paid must be clearly shown on the settlement statement (like Form HUD-1).
  • You must use the cash method of accounting.

You can’t deduct loan-origination fees that are service fees.

You can only deduct mortgage insurance premiums paid or accrued on a contract issued after Dec. 31, 2014, and prior to Jan. 1, 2020. Treat the premiums as qualified residence interest. Deduct them on Schedule A. You must amortize prepaid mortgage insurance premiums over the shorter of:

  • The term of the mortgage
  • 84 months

You can only deduct prepaid real estate taxes that you actually paid to the taxing authority. You can’t deduct prepayments placed in an escrow account until they’re actually paid to the taxing authority.

Related Topics

Related Resources

Qualified Tuition Plans

What is a qualified tuition plan? Can it impact your tax return? Learn more about this type of savings account and get tax answers at H&R Block.

File Back Taxes For Last Year

How should you file back taxes for last year, as well as taxes for this year? Learn more from the tax experts at H&R Block.

New York Tax Rate

Do you earn income in New York? If so, you will owe New York income taxes. Read here to learn more about the NY tax rate here.

Where’s my refund – New Mexico?

Looking for more information about your New Mexico refund? Find out details on how to check your refund status, who to contact, and more from H&R Block.