Start For Free

Fast, Secure, and Always Accurate!

Back to List

Category: General Questions

What is a HUD-1 Statement?

The closing statement to a real estate purchase contains many potential tax deductions for you. Treatment of closing statement line items differ depending on whether property is business (rental) property or used as a personal residence.

Below is a helpful table of typical tax treatments of major line items from your HUD-1 statement. However, there may also be certain items that are treated differently depending on your particular tax situation.

 

A notation of "basis" refers to costs that become part of the total capitalized cost of the property and not currently deductible, however, these costs can be deducted at the time of sale, or earlier using depreciation if they relate to rental property.

 

Deductible items are in bold. Nondeductible items are in red. If the item is not coded, in most cases, it is just added to the basis of your home. Note: How you treat each item also depends on whether the home is your Personal Residence (left column) or a Rental Property (right column).

HUD-1

Line #

Closing   Statement

Description

Tax Treatment

Personal   Residence

Tax Treatment

Rental Property

101

Contract Sales   Price

Basis-is   relevant if property is later sold or rented

Basis-building   portion eligible for depreciation

102

Personal   Property

Basis-is   relevant if property is later sold or rented

Basis-eligible   for accelerated depreciation

103

Settlement   Charges

See lines   700-1305 below

See lines   700-1305 below

104-105

Miscellaneous

Varies

Varies

106

City/Town Taxes

Deductible as   itemized deduction*

Deductible   as rental expense*

107

County Taxes

Deductible as   itemized deduction*

Deductible   as rental expense*

108

Assessments

 

LID   assessments are part of basis, other assessments are typically deductible*

109-112

Miscellaneous

Varies

Varies

210

City/Town Taxes

*This credit   reduces deductible taxes on Line 106 above

*This credit   reduces taxes on Line 106 above

211

County Taxes

*This credit   reduces deductible taxes on Line 107 above

*This credit   reduces deductible taxes on Line 107 above

212

Assessments

*This credit   reduces assessments on Line 108 above

*This credit   reduces assessments on Line 108 above

213-216

Miscellaneous

Varies

Varies

700-703

Sales &   Realtors Commissions

Basis

Basis

801

Loan   Origination Fee

Deductible as   itemized deduction (points)

Amortized over   term of mortgage

802

Loan Discount

Deductible as   itemized deduction (points)

Amortized over   term of mortgage

803

Appraisal Fee

Basis

Basis

804

Credit Report

Non-deductible

Basis

805

Inspection Fee

Basis

Basis

806

Mortgage   Insurance Fee

Non-deductible

Amortized over   term of mortgage

807

Assumption Fee

Non-deductible

Amortized over   term of mortgage

808-811

Miscellaneous

Varies

Varies

901

Prorated   Interest

Deductible as   itemized deduction – typically included in year-end interest statement

Deductible   as rental expense – typically included in year-end interest statement

902

Mortgage   Insurance (PMI)

No longer Deductible as itemized deduction (expired in 2017)  

Amortized over   term of mortgage

903

Hazard   Insurance

Non-deductible

Deductible   as rental expense

904-905

Miscellaneous

Varies

Varies

1001

Hazard   Insurance

Non-deductible

Reserves-deductible   when paid from escrow

1002

Mortgage   Insurance

Non-deductible

Reserves-amortizable   when paid from escrow

1003

City Property   Taxes

Reserves-deductible   as itemized deduction when paid from escrow

Reserves-deductible   when paid from escrow

1004

County Property   Taxes

Reserves-deductible   as itemized deduction when paid from escrow

Reserves-deductible   when paid from escrow

1005

Assessments

Varies

Varies

1006-1008

Miscellaneous

Varies

Varies

1101

Settlement Fees

Basis

Basis

1102

Abstract or   Title Search

Basis

Basis

1103

Title   Examination

Basis

Basis

1104

Title Insurance   Binder

Basis

Basis

1105

Document   Preparation

Basis

Basis

1106

Notary Fees

Basis

Basis

1107

Attorney’s Fees

Basis

Typically part   of basis, if tenant related may be amortized over term of lease(s)

1108-1110

Title Insurance

Basis

Basis

1111-1113

Miscellaneous

Varies

Varies

1201

Recording Fees

Basis

Basis

1202

City/County Tax   Stamps

Basis

Basis

1203

State   Tax/Stamps

Basis

Basis

1204-1205

Miscellaneous

Varies

Varies

1301

Survey

Basis

Basis

1302

Past Inspection

Basis

Basis

1303-1305

Miscellaneous

Varies

Varies

 

The above table   summarizes tax treatment to buyers of properties – for sellers, these costs   (including remaining basis) are deducted at the time of sale, with the   exception of costs that are specifically noted as non-deductible. Of course,   capital gains may not be recognized if the property is a personal residence   qualifying for the $250,000/$500,000 capital gain exclusion, or a rental   property disposed of via a tax free exchange.