Buying home - need advice (CA)

[kirani]

Hi,

I am living in the sate of CA and we are in the process of buying home. We are trying to close the loan before the end of this year (2005). I was wondering if we can writeoff the closing cost (prepaid interest, points, etc) that I will be paying when closing the loan this year (yr 2005) in my next years (2006) tax return? Currently, I am doing standard deduction, so the closing cost will not add-up to more than the STD amount.

Please advice.

Thanks,

 

[abezon]

The only closing costs you can write off are points. You either deduct them in full the year paid or deduct them over the life of the loan (30 years or until you refinance). Taxwise, a January 1 closing is better for you.

 

[kirani]

Thank you for the feedback. I cannot close on Jan 1st as the Banks will be closed on 1st and 2nd. My lock expires on 2nd Jan, so I am in dilema as to when I should close. Should I close it before this year end or in the 1st week of Jan. If I understand you correctly, either way I can writeoff the points.