Nonrecurring closing costs are those that occur in one instance of a real estate or loan transaction, and may not be the same in another transaction. They may include fees for home inspections, attorney fees, title searches, loan origination fees, and other similar costs. These costs are separate from the ongoing costs associated with the loan, such as loan interest or mortgage insurance.
What Are Common Nonrecurring Closing Costs for Home Buyers?
Among the most common nonrecurring closing costs for home buyers are origination fees, application fees, appraisal fees, inspection fees, attorney fees, title search fees, survey fees, and recording fees. Many lenders also require home buyers to pay for an appraisal, which can range in price from a few hundred dollars to several thousand dollars, depending on the size and scope of the appraisal.
What Are Common Nonrecurring Closing Costs for Home Sellers?
Homeowners who are selling their property typically have to pay nonrecurring closing costs such as realtor commissions, document preparation fees, broker fees, settlement fees, and transfer taxes. In some cases, home sellers may also have to pay back-taxes or other outstanding bills that must be paid prior to the sale. Homeowners should make sure to budget for these costs when selling their home.
Are Nonrecurring Closing Costs Tax Deductible?
Nonrecurring closing costs are generally not tax-deductible. However, some closing costs that are billed to the buyer are considered part of the purchase price and are taxable to the buyer. As a result, these costs may be eligible for deduction as a capital loss. It’s best to consult a qualified tax professional if you’re unsure whether or not your nonrecurring closing costs are tax deductible.