Question

I purchased a house this year. Would I qualify for any tax deductions on a home purchase?

Answer

Unfortunately, most of the expenses you paid when buying your home are not deductible in the year of purchase.

The only tax deductions on a home purchase you may qualify for is the prepaid mortgage interest (points). To deduct prepaid mortgage interest (points) paid to the lender if you must meet these qualifications:

  • Your main home secures your loan (your main home is the one you live in most of the time).
  • Paying points is an established business practice in your area.
  • The points you paid weren’t more than the amount usually charged in that area.
  • You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the year you pay them.
  • The points you paid weren’t for items that are usually listed separately on the settlement sheet. Ex: appraisal fees, inspection fees, title fees, attorney fees, or property taxes
  • The funds you provided at or before closing, including any points the seller paid, were at least as much as the points charged.
  • You didn’t borrow funds from your lender or mortgage broker to pay the points.
  • You used your loan to buy or build your main home.
  • The points were computed as a percentage of the principal amount of the mortgage.
  • The amount shows clearly as points on your settlement statement.

Don’t leave money on the table

File your taxes and get every credit and deduction you deserve. Our tax pros can help you file in person or virtually, or you can file on your own online.

Other fees that you paid before or at closing aren’t deductible. However, they’re included in your basis of the home. These fees include:

  • Title insurance
  • Appraisals
  • Abstract fees
  • Recording fees
  • Surveys

You can deduct some of the ongoing payments you make for owning your home, including:

  • Real estate taxes actually paid to the taxing authority
  • Qualifying home mortgage interest
  • Mortgage insurance premiums

You can’t deduct these:

  • Property insurance
  • Depreciation
  • Utility payments

Related Topics

Related Resources

Arizona Taxes

Do you earn an income in Arizona? Read here about Arizona taxes including how much you have to pay, when they’re due, and how to pay them.

Filing Taxes in Two States

Moving or working across state lines can mean filing taxes in two states. Learn what this means for your taxes from the experts at H&R Block.

Online tax return – filing your tax return online

File your tax return online with H&R Block. We’re breaking down how to file your taxes online for an easy and efficient process.

Florida Tax Rate

The Florida tax rate is 0% for income taxes. While individuals don’t pay Florida income tax, corporations do. Learn more in this post from H&R Block.