Our accountant said that a $350. mortgage application fee and $500. spent on a home inspection that turned up a defect the seller refused to remediate are not allowed as deductions. This accountant pays little attention to our questions, and we're considering going elsewhere. Anyway, since this mortgage fee and home inspection cost were incurred in anticipation of an investment (property), I don't see why they can't be itemized as losses.
Was it the potential purchase of a home (your personal residence) or of rental real estate? If the former, your accountant is correct.
Were you planning on buying the home to live in? (That seems likely based on your calling it a home, not a house.) In that case, the fees are personal and not deductible. If you were buying an investment property (to rent out, or just to flip for a profit) then the expenses should be deductible. Do you have evidence that you're in the real estate business? Seth
But then if they go on to buy another home, can they capitalize the $350 and add it to the basis of the new home? Stu
No, because the 350$ has nothing to do with the cost of a house; only pertains to obtaining a mortgage. ChEAr$, Harlan Lunsford, EA n LA
See? Thank you, and all the other responders, for asking. Our accountant didn't even bother to ask us this, when in fact the home *was* going to be a rental. In fact we were barred from certain mortgages with better interest rates specifically because this purchase could not be regarded as a primary residence. Therefore--if any of you would be so kind--could the mortage application and accompanying house inspection cost be regarded as investment losses?
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