HUD-1, Taxes, and Capitalization: How to account for a new purchase at Tax Time

[J. Martin]

Each year, after I purchase a property, I have to re-look up how to treat the various items from the HUD-1 (closing statement) when preparing my Schedule E. I am NOT an accountant, but I did find this article by one EXTREMELY helpful.

It both explains the over-arching principals, and goes line-by-line down the HUD-1, specifically identifying whether the expense is a current expense (typically interest, insurance, property taxes), added to loan costs (e.g., points) , adjustment to cost basis (e.g., title, recording.), or neither (typically deposits/advances).

Enjoy! May your taxes be tiny :)

http://www.theborgfirm.com/hud-1-accounting-guide/