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I Purchased a Rental Property Last Year. What Closing Costs Can I Deduct? Print E-mail

The only deductible closing costs are those for interest, and deductible real estate taxes. Other settlement fees and closing costs for buying the property become additions to your basis in the property. These basis adjustments include:

- Abstract fees,

- Charges for installing utility services,

- Legal fees,

- Recording fees,

- Surveys,

- Transfer taxes,

- Title insurance, and

- Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions.

- Those costs that are basis adjustments can be part of your yearly depreciation deduction for the rental property.

For additional information, refer to Publication 527, Residential Rental Property, Publication 17, Your Individual Income Tax Guide, and Publication 535, Business Expenses.

References:

- Publication 527, Residential Rental Property

- Publication 17, Your Individual Income Tax Guide

- Publication 535, Business Expenses

Source: http://www.irs.gov

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"Gross profit margin" is the ratio of a company's gross profit to its net sales. Gross profit margin is expressed as a percentage. For example, suppose a company had sales of $100,000 and the cost of the goods sold (the cost of producing the goods) totaled $60,000. The gross profit margin would be calculated by deducting the cost of the goods sold from the net sales ($100,000 - $60,000=$40,000) and then dividing the result by net sales ($40,000 / $100,000 = 0.4), so the gross profit margin would be 40%. This means that for every dollar in sales the company retains 40 cents with which to pay its general overhead and administrative expenses.

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