Settlement Statement Income Tax Analysis (August, 2017)

Summary of Borrower's Transaction

Item Description

Residence Purchase Refinance

Second Home Purchase Refinance

Business or Rental Purchase Refinance

Contract Price

Cost

Cost

Cost

Cost

Cost

Cost

City/Town/County Taxes

1 Deduct

N/A

1 Deduct

N/A

1 Deduct

N/A

Taxes (Credit)

Reduce Real Estate Taxes or Increase Income

Assessments-Improvements

Cost

Cost

Cost

Cost

Cost

Cost

Assessments-Maintenance, Usage

N/A

N/A

N/A

N/A

Deduct

Deduct

Assessments-Improvements (Credit)

Reduction of Cost

Reduction of Cost

Reduction of Cost

Reduction of Cost

Reduction of Cost

Reduction of Cost

Assessments-Maintenance, Usage (Credit)

N/A

N/A

N/A

N/A

N/A

N/A

Payoff of Existing Loans - Interest Portion Only

N/A

Deduct

N/A

Deduct

N/A

Deduct

Fees

Cost

Cost

Cost

Cost

Deduct

Deduct

Closing Cost Credit

2

2

2

2

2

2

Commissions

Cost

N/A

Cost

N/A

Cost

N/A

Loan Origination/Discount Points

3 Deduct

4 Amortize

Amortize

Amortize

Amortize

Amortize

Other Loan Costs

N/A

N/A

N/A

N/A

Amortize

Amortize

Interest Adjustment (If not included on form 1098)

Deduct

Deduct

Deduct

Deduct

Deduct

Deduct

Mortgage and Hazard Insurance

5 N/A

N/A

N/A

N/A

Deduct

Deduct

Reserves Deposited with Lender - Impounds

N/A

N/A

N/A

N/A

6 N/A

6 N/A

Title Charges

Cost

N/A

Cost

N/A

Cost

Amortize

Recording Charges

Cost

N/A

Cost

N/A

Cost

Amortize

City/County, State Tax Stamps and Transfer Taxes

Cost

N/A

Cost

N/A

Cost

Amortize

Additional Settlement Charges

Cost

N/A

Cost

N/A

Cost

Amortize

Note:
  1. Deduct only amounts applicable to the time period purchaser owns the property; reminder is added to cost. Please see your tax adviser to determine if you should capitalize real estate taxes (e.g. if you are subject to AMT tax.) if you take standard deductions you may be eligible for an extra $500 deduction.
  2. Consult your tax adviser to determine the effects of the closing cost credit on your cost and deductions.
  3. Deductible if all of the following conditions are met:
    • Designated on the Uniform Settlement Statement as points incurred in connection with the indebtedness.
    • Computed as a percentage of the amount borrowed.
    • Charged under established business practice of charging points for loans in the area in which the residence is located.
    • Paid in connection with the acquisition of principal residence and the loan is secured by such residence.
    • 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 deducted at as points) and not from proceeds of the loans.
  4. Deductible if original loan was short-term financing used to finance acquisition of principal residence (see also 2 above)
  5. Deductible when actually paid by lender from funds withheld.

Prepared by AND Reprinted with permission of: Liptz, Roberts, Marquez, Merkle, Singh & Zipor Chartered, Certified Public Accountants. 5530 Wisconsin Avenue, Suite 1100, Chevy Chase, MD 20815 Phone: (301) 657-2900 Fax: (301) 657-2166. www.lrmcpas.com

This information is for general information purpose and should not be relied upon in a specific transaction without first consulting Liptz, Roberts, Marquez, Merkle, Singh & Zipor Chartered or a professional tax adviser. The above may contain or incorporate federal tax advice. Under recently promulgated US Internal Revenue Service (IRS) standards, we are required to inform you that only formal, written tax opinions meeting IRS requirements may be relied upon by taxpayers for the purposes of avoiding tax-related penalties. Accordingly, the above information is not intended or written to be used , and it cannot be used for the purpose of avoiding tax-related penalties under the Internal Revenue Code. please contact a member of our firm if you require a formal, written tax opinion that satisfies applicable IRS requirements, or if you have any other questions regarding federal tax advice.