Tax Deductions for First-Year Home Owners

Deduct money paid towards mortgage points or origination fees.
Entertaining in the New Home

Entertaining in the New Home

Homeowner Kelsey and Trip Purks enjoy entertaining guests at their new home.

From: Fixer Upper

Congratulations -- you're a homeowner! Now that you've moved into your new digs, you'll need to:

  • Decide what color to paint the living room
  • Sort through those last few boxes (eventually)
  • Learn about tax deductions for new homeowners

Even before you sign on the dotted line, you can get a mortgage credit certificate (MCC), which is intended to help lower-income buyers afford homeownership.

If you qualify, you can claim the credit each year to cover part of your home's interest. The only catch: You must get an MCC before you get a mortgage and buy a home. Contact your state or local housing finance agency for more information.

You're eligible for a host of tax deductions the minute you get the keys to your front door. Like all homeowners, you can subtract real estate taxes and mortgage interest from your tax tab. Even if you bought a home in December, it's worth getting a few dollars off your IRS bill.

The year you buy your home, you can also deduct any money paid towards mortgage points. The term "points" refers to charges paid by a borrower to get a mortgage, and can also be called loan discounts, discount points, origination fees or maximum loan charges.

You must meet these criteria to qualify:

  • You are buying (not refinancing) a primary residence. Your loan must be secured by the home you live in most of the time.
  • Your overall cash paid at closing exceeds the points charged. This can include money from you, or points paid by the seller. You can't deduct points you paid for with borrowed funds from a lender or mortgage broker.
  • You're not using the points to avoid traditional closing costs. If you paid points in lieu of closing costs, like title insurance and attorney's fees, you can't get a tax credit.

If you meet that criteria, the amount on your settlement statement that's listed as "points charged for the mortgage" can be deducted from your taxes.

Always consult your tax advisor. For more information about home mortgage points, visit the IRS Web site.

Next Up

Building Mortgage Interest: More Tax Deductions and Incentives for Homeowners

Learn about the many tax advantages of homeownership, including special deductions and local incentives.

Tax Breaks for Homeowners

A huge benefit of being a homeowner is the ability to take advantage of a number of tax breaks. Check out the possibilities.

Understanding Property Taxes and Assessments

Homeowners have to pay property taxes. Before you buy, know how your local property taxes and special assessments will impact your cost of ownership.

Calculating Your Property Tax Bill

The tax amount you see on a listing might have nothing to do with how much your property tax bill will be after you buy the home. Here's how to crunch the numbers.

Urban Home Buying Tips

Real estate agents weigh in on the downtown buying process.

Buying and Selling Homes With the Market

Learn how to be a savvy seller in both buyer's and seller's markets.

Take These Pointers When Buying a Second Home

Brush up on location, lifestyle and finances while searching for your retreat.

Am I Really Ready to Buy a Home?

Overwhelmed by the idea of a monthly mortgage, taxes and other costs of owning a home? Do a little real estate therapy with expert Tara-Nicholle Nelson.

Maintaining Good Credit After Buying a Home

It's important to maintain good credit even after you buy a home. Here's how to do it.

Buying a Home: Don't Forget These Expenses

When deciding how large a down payment you can afford, remember to leave yourself some padding.

On TV

Fixer Upper

7am | 6c

Fixer Upper

8am | 7c

Fixer Upper

9am | 8c

Fixer Upper

10am | 9c

Fixer Upper

11am | 10c
On Tonight
On Tonight

Hawaii Life

8pm | 7c

Hawaii Life

8:30pm | 7:30c

Island Life

9pm | 8c

Island Life

9:30pm | 8:30c

Island Hunters

10:30pm | 9:30c

House Hunters

11pm | 10c

Island Life

12am | 11c

Island Life

12:30am | 11:30c

Island Hunters

1:30am | 12:30c

Hawaii Life

3am | 2c

Hawaii Life

3:30am | 2:30c

Shop This Look

Found a living space you love in HGTV's Photo Library? Get the look in your own home with products from Wayfair.

Follow Us Everywhere

Join the party! Don't miss HGTV in your favorite social media feeds.