What closing costs related to a purchase of a rental property are deductible?
According to the IRS, "the only deductible closing costs (related to a purchase of a rental property) are those for interest and real estate taxes related to the rental propery."
The other costs related to a closing on a purchase of a rental propery become additions to the taxpayers basis in the property acquired and thus become part of your depreciation deduction.
What costs are considered an addition to basis?
The IRS has specfically identified the following costs listed below that would become an addition to the basis of the rental property acquired and thus form part of the depreciable deduction as follow;
2.Charges for installing utility services