Classification of costs found on closing statement for investment property purchases

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1. Cost of obtaining title: These are added to basis. Examples would be Commissions, Legal fees, title search, title policy charges, transfer taxes etc.
2. Costs incident to Purchase: These are deductible. They include prorated real estate taxes, condo fees, utilities and hazard insurance.
3. Costs incident to a loan: These are amortizable over the life of the loan. Examples would be: lender required legal fees,appraisal fees,mortgage broker’s commissions,pest inspection,credit reports,loan fees and mortgage insurance. Even points paid on loans to acquire investment property is written off over the life of the loan.

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