Buying a House by Year’s End Can Save You Money on Your Taxes

If you’re feeling overwhelmed by the holiday season or end-of-the-year deadlines at work, you might think you should wait until next year to buy a house. Waiting until things have settled down can be less stressful, but buying a home before the end of the year can save you money when you file your taxes.  

Take Advantage of Tax Deductions

You might be able to deduct some or all of these home-related expenses when you file your tax return:

Mortgage interest: If you make one or more loan payments this year, you’ll be able to deduct the interest that you pay when you file your taxes.

Discount points: When you take out a mortgage, you might have the option to purchase discount points. If you do, you’ll pay an extra fee at closing to reduce your interest rate for the life of the loan. When you file your tax return, you’ll be able to deduct the amount you pay for discount points.

Property taxes: When you close on your new house, you might have to pay state and/or local taxes. You’ll be able to deduct property tax payments when you file your tax return in 2026. If your property taxes are due next year, check with your local tax office to find out if you can prepay them in 2025 and write them off when you file your tax return in 2026.

You’ll Have to Meet Eligibility Guidelines

To deduct these expenses when you file your 2025 tax return, you’ll have to close on your new house by December 31, 2025. Payments that you make in 2026 will be deductible when you file your 2026 tax return in early 2027.

The amount you’ll be able to deduct will depend on factors like your income and marital status. You might have to meet other criteria to qualify for certain tax deductions.

To write off home-related expenses, you’ll have to itemize your deductions. Before you file your taxes, add up the deductions you’re eligible for and compare them to the standard deduction to figure out which would work out better for you. If an accountant will prepare your tax return, provide whatever documentation your tax preparer will need to figure out if you should itemize or take the standard deduction.

Fulfill Your Dream of Becoming a Homeowner

If you want to buy a house, but you’ve been putting it off because you don’t know how the process works, there’s a simple solution. In Financial Freedom Voyage’s First-Time Homebuyer Masterclass, you’ll learn how to choose a real estate agent, find a house that fits your budget, and avoid common mistakes. With that knowledge, you’ll be ready to approach the homebuying process with confidence. Enroll today.