Loan Fees

Sandy Botkin
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Here is a tip that I bet most of you didn’t know that could save you thousands. If you didn’t know this, spread the word among your friends:

When you buy a home, you can NOT deduct or add to basis any loan costs other than points. Thus, lender required insurance, mortgage title insurance, lender required inspections, credit report fees, lender attorney fees, surveys and other lender required costs are not deductible and are not added to basis. They are lost money!

Wouldn’t it be great if you can get some benefit from these? Well, with some planning, you can! When you buy your next principal residence, put in the contract that the seller will pay these costs up to an estimated amount given to you by your broker. You would thus raise your offer by the amount of these fees so that it effectively costs the seller nothing. By raising your offer by the amount of these estimated fees, you get a higher basis in your property.

Result: you have totally converted deductible items that would result in no benefit to increasing your basis by the effective cost of these items.

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