Mortgage tax

[HV Ken]

In New York, when obtaining a mortgage, one of the closing costs is a "mortgage tax". We have always advised clients that this tax cannot be included in itemized deductions (Sch A). Today we were asked by a client to provide documentation to validate this, as they were told by a friend that you can add it to Sch A.

I have read the IRS form instructions, checked the various CCH pubs we have, and cannot find anything on this one way or another (or at least am not looking in the correct place).

Can someone point me to a reference to substantiate that it can *not* be included on Schedule A ?

Thanks!

[HV Ken]

Found pub 530....

[Mike D]

This may help. I believe that these NYS Mortgage Taxes are considered transfer taxes for deduction purposes?

Publication 17 (2009), Your Federal Income Tax

For Individuals

For use in preparing 2009 Returns

Real Estate-Related Items You Cannot Deduct

Payments for the following items generally are not deductible as real estate taxes.

Taxes for local benefits.

Itemized charges for services (such as trash and garbage pickup fees).

Transfer taxes (or stamp taxes).

Rent increases due to higher real estate taxes.

Homeowners' association charges.

Transfer taxes (or stamp taxes). Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. If paid by the buyer, they are included in the cost basis of the property.

Good luck

Mike Dubin CPA