I purchased a rental property last year. What closing costs can I deduct? Answer: Generally, deductible closing costs are those for interest, certain mortgage points and deductible real estate taxes. Many other settlement fees and closing costs for buying the property become additions to your basis in the property and part of your depreciation deduction, including: Abstract fees Charges for installing utility services Legal fees Recording fees Surveys Transfer taxes Title insurance Any amounts the seller owes that you agree to pay (such as back taxes or interest, recording or mortgage fees, sales commissions and charges for improvements or repairs). Additional Information: Publication 527, Residential Rental Property (Including Rental of Vacation Homes) Subcategory: Rental expensesCategory: Sale or trade of business, depreciation, rentals Can you deduct mortgage insurance premiums on rental property? Answer: In general, you can deduct mortgage insurance premiums in the year paid. However, if you prepay the premiums for more than one year in advance, for each year of coverage you can deduct only the part of the premium payment that will apply to that year. Report the deduction on line 9 of Schedule E (Form 1040), Supplemental Income and Loss. Additional Information: Is my residential rental income taxable and/or are my expenses deductible? Publication 527, Residential Rental Property (Including Rental of Vacation Homes) Subcategory: Rental expensesCategory: Sale or trade of business, depreciation, rentals Back to Frequently Asked Questions