On the closing costs on a loan. Can I expense it completely out for the year of 2013 of do I need to depreciated any of it? I understand that I am depreciating the house and not the land, I am putting land as an asset; However not sure of the closing costs.

Thanks

“On the closing costs on a loan. Can I expense it completely out for the year of 2013 of do I need to depreciated any of it? “======I guess it depends. When you bought your home, you probably paid settlement or closing costs in addition to the contract price. These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. The only settlement or closing costs you can deduct on your tax return are home mortgage interest, points, and certain real estate tax. You deduct them on your tax return on Sch A of 1040 in the tax year you buy your home if you itemize your tax deductions on your tax return. You can add certain other settlement or closing costs to the tax basis of your home. There are some settlement or closing costs that you cannot deduct on your tax return or add to the tax basis. You can deduct points if your settlement statement clearly identifies the amount of points;the points are computed as a percentage of the mortgage loan principal;the amount paid as points doesn't exceed the normal rate charged in your area. If it does, the excess amount is amortized over the life of the loan;the points are paid on a loan to purchase or build a principal residence, and your residence secures the loan; the points are paid directly from your own savings. You can't deduct points paid through the loan proceeds. In other words, you pay the points as part of your down payment on or before the closing date of the mortgage. Any points paid from loan proceeds are amortized over the life of the loan.Real estate tax is usually divided so that you and the seller each pay tax for the part of the property tax year that you each owned the home..


“I understand that I am depreciating the house and not the land, I am putting land as an asset; However not sure of the closing costs.”======As you can see, only property used in a trade or business or other income producing activity can be depreciated on your tax return on Sch E of 1040. You cannot claim depreciation on your tax return on property that you hold for personal purposes, such as your personal residence; the depreciation allowed or allowable would increase your gain when you dispose of the pty in the future. Land is a tangible asset, but it's not subject to depreciation for the simple reason that land doesn't get worn out or obsolete. land doesn't have a "determinable usable life," which is a required element for any asset to be depreciable. That doesn't mean land can't decline in value. It certainly can. For example, a piece of undeveloped land in an area with a hot housing market would probably be in high demand, and that would be reflected in the value. If the housing market goes cold, the demand will drop, and so will the value of the land. But the decline doesn't qualify as depreciation.