title insurance company

Is Minneapolis title insurance tax deductible?

If you’ve purchased a new Minneapolis home in the last year, you may be asking about your tax deductions in 2018. There’s no doubt about it - it’s beneficial to understand your tax benefits now that you’re a home owner. One of the frequent questions we get asked is…”Is our title insurance tax deductible?” If you’ve been asking the same question, we’ve got you covered with this short blog post.

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What is title insurance?

If you’re still in the process of buying your home, you may need to start with what title insurance covers. Title insurance is need for many real estate transactions and will protect you, as the buyer, from any undisclosed claims on the title of your new home. These can include:

  • Undisclosed previous heir to the property

  • Tax liens

  • Judgments against the title/property

  • Unsatisfied mortgage

Title companies will typically investigate your home’s title prior to issuing a title insurance policy to ensure there are no claims on your property and your closing goes smoothly.

How much does title insurance cost?

The cost of your title insurance policy will depend on the cost of the home you are purchasing and what state the home sits in. It’s best to contact your title insurance company for a specific quote. Try our fee calculator for an estimate on your costs.

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Is title insurance tax deductible?

The short answer is no. Your title insurance cost is not tax deductible. However, you can add the cost of title insurance to the cost basis of your home which can save you on taxes when you sell the home.

Capitalizing your title insurance cost

Capitalizing your title insurance cost is simply adding this amount to the cost basis of your home. This can help you save when you go to sell as it will reduce your capital gains.

Consult your tax professional

Don’t take our word for it - we’re the experts in title insurance. Consult your tax professional and research the latest tax regulations.

If you’re ready to purchase a new home and are looking to learn more about title insurance, we’re here to help. We work with individual buyers, real estate agents, and mortgage lenders to give you peace of mind throughout the closing process.

Why You Need Title Insurance for your Minneapolis New Construction Home

Finding and buying a home in this competitive market comes with some challenges. Many Minneapolis home buyers are turning to new construction to find their dream home. And if you've purchased a newly built home, you may be asking if you really need title insurance for the closing process. The short answer is yes, so keep reading to find out why. 

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Previous Land Owners

Title insurance can prevent you and your lender from issues related to title discrepancies or past owners claiming rights to the property you just bought. In the case of new construction, many assume that title insurance is unnecessary because they will be the first owner of the property.  However, the land your new home sits on can have many previous owners and if there is a discrepancy related to a previous transfer of title, this can pose an issue for you as you move into your brand new home. 

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Liens and Your Contractor

Your builder is responsible to pay all subcontractors that work on your new home. If your builder refuses to pay one of the subcontractors, they can place a lien on your property until the matter is settled.  An owner's title insurance policy will protect you from any potential liens places on your property. 

Clerical Mistakes 

Clerical mistakes made before you were even thinking about building a home can come back to bite you. If there was a mistake at the registrar's office or on a title transfer, this can impact your home purchase and closing. Purchasing title insurance can help give you peace of mind that all is in order as you sign on the dotted line. 

Lender Requirements

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Your lender may require an owner's title policy in order to approve your home loan. While your owner's policy protects your rights and interests, lenders will also want a lender's title insurance policy to protect their interests when it comes to payment on your loan.  

If you are purchasing a new construction home, title insurance is a must-have when it comes to ensuring your rights are protected, giving you peace of mind through the entire closing process. Here at Twin City Title, we're here to help. We provide both owner's and lender's title insurance to help you when purchasing your newly built home. 

Common Title Problems to Watch Out For

Your offer has been accepted and you are ready to close on your new home. As you prepare for the big day, your real estate agents begins to speak with you about title insurance. Title insurance protects you from common problems that can occur with your title and closing. So  what are the common title problems you need to watch out for when it comes to your new home?  

Creditor Claims

The previous owner may have outstanding debts when it comes to your new home. From contractors to other work performed on your new home - outstanding debts from the previous owner can have an impact on your title and closing. 

Undisclosed Heirs

Like it or not, undisclosed heirs from a previous owner can have an impact on your title. It can be an heir from the previous owner or from 4 owners ago. If they can prove a legal right to your home, this can affect your title and ownership. 

Common Title Problems to watch out for

Errors in Tax Records

We all make mistakes. However, any errors in previous tax records, no matter how unintentional,  can be costly to correct and can jeapordize your title 

Forgeries

While this one may not be as common as you might think, any forgeries on documents related to your home purchase and closing can become a problem.  Discovered forgeries can make your title null and void.  

Easements and Boundary Disputes

Just when you thought your property belonged to you, you receive a notice of easement or boundary issues with your property. Your city can assess a different boundary or use for your property - creating a title headache (literally). 

The rewards of your new home far outweigh the potential pitfalls in the title process. The best way to maintain peace of mind throughout your home buying process is to ensure you have the proper title insurance. Your title insurance policy will protect you from these common problems and more as you move into your new home.