You Buy A House — What Is Tax Deductible When

Alex had to pay a portion of the year’s property taxes at closing, covering the time Alex actually owned the home. These are deductible, but they fall under a cap. For the 2026 tax year, the SALT cap is $40,000 (up from $10,000 in previous years). How to Deduct Mortgage Points on Your Tax Return - TurboTax

To get a lower interest rate, Alex had paid "points" at closing (each point equals 1% of the loan). Because these are considered , they are generally fully deductible in the year they are paid for a primary residence. what is tax deductible when you buy a house

Alex’s largest monthly expense was the mortgage payment. Most of that payment in the early years is interest, and Alex learned that interest on up to of mortgage debt is deductible. This applies to a primary residence and even one second home, provided they meet IRS standards. 2. Buying the Rate: Discount Points Alex had to pay a portion of the

If Alex had refinanced instead of buying, those points would usually have to be deducted slowly over the life of the loan. 3. Sharing the Burden: Property Taxes How to Deduct Mortgage Points on Your Tax

Once upon a time, a first-time homebuyer named Alex finally closed on a dream house. As the dust settled on the move, Alex started wondering if any of those heavy closing costs could actually help during tax season. Here is what Alex discovered about what is tax-deductible when you buy a house in . 1. The Big Prize: Mortgage Interest