Capitol Title

Settlement Statement Income Tax Analysis

Hud Reference Item Description Residence
Purchase Refinance
Second Home
Purchase Refinance
Business or Rental
Purchase Refinance
101 Contract Price Cost Cost Cost Cost Cost Cost
106-107 City/Town/County Taxes 1 Deduct N/A 1 Deduct N/A 1 Deduct N/A
108 Assessments—Improvements Cost Cost Cost Cost Cost Cost
Assessments—Maintenance, Usage N/A N/A N/A N/A Deduct Deduct
109-112 Payoff of Existing Loans—Interest Portion Only N/A Deduct N/A Deduct N/A Deduct
210-211 City/Town/County Taxes Income N/A Income N/A Income N/A
Lines 210-211 Reduce Real Estate Taxes or Increase Income
212 Assessments—Improvements Reduction of Cost Reduction of Cost Reduction of Cost Reduction of Cost Reduction of Cost Reduction of Cost
Assessments—Maintenance, Usage N/A N/A N/A N/A Income Income
701-705 Commissions Cost N/A Cost N/A Cost N/A
801-802 Loan Origination/Discount (Points) 2—Deduct 3—Amortize Amortize Amortize Amortize Amortize
803-811 Other Loan Costs N/A N/A N/A N/A Amortize Amortize
901 Interest Adjustment (If not included on form 1098) Deduct Deduct Deduct Deduct Deduct Deduct
902-905 Mortgage and Hazard Insurance N/A N/A N/A N/A Deduct Deduct
1001-1008 Reserves Deposited With Lender N/A N/A N/A N/A 4 N/A 4 N/A
1101-1113 Title Charges Cost N/A Cost N/A Cost Amortize
1201 Recording Fees Cost N/A Cost N/A Cost Amortize
1202-1205 City/County and State Tax Stamps
& Transfer Taxes
Cost N/A Cost N/A Cost Amortize
1301-1305 Additional Settlement Charges Cost N/A Cost N/A Cost Amortize

Notes:

  • 1) Deduct only amounts applicable to the time period purchaser owns the property; remainder is
  • 2) Deductible if all of the following conditions are met:
    1. Designated on the Uniform Settlement Statement as points incurred in connection with the indebtedness.
    2. Computed as a percentage of the amount borrowed.
    3. Charged under established business practice of charging points for loans in the area in which the residence is located.
    4. Paid in connection with the acquisition of principal residence and the loan is secured by such residence.
    5. Paid directly by the taxpayer. If paid by the seller after 12/31/90, points are deductible by the buyer. However, the basis in the residence must be reduced by the amount deducted by the buyer that was paid for by the seller.The points must be provided by the funds of the taxpayer (i.e. cash downpayments, escrow deposits and/or earnest money applied at closing must equal or exceed the amount to be deducted at as points) and not from proceeds of the loan.
  • 3) Deductible if original loan was short-term financing used to finance acquisition of principal residence (see also 2 above)
  • 4) Deductible when actually paid by lender from funds withheld.

Prepared By AND Reprinted with permission of: Liptz, Roberts and Marquez, Chartered, Certified Public Accountants, 5530 Wisconsin Avenue, Suite 1100, Chevy Chase, MD 20815 Phone: (301)657-2900 Fax: (301)657-2166.

This information is for general information purposes and should not be relied upon in a specific transaction without first consulting Liptz, Roberts and Marquez, Chartered or a professional tax advisor.