Are housing closing costs tax deductible?
On One Hand: Points are Tax DeductibleWhen a borrower purchases a mortgage, if he pays any points to purchase a lower interest rate, the fees associated with those points are tax deductible. A point, however, is not the same as an origination fee, which is not tax deductible, unless it is on a VA or FHA loan or expressed as a point, and not a fee. The points can be deducted from the borrower’s income taxes for that calendar year.On the Other: Most Closing Costs are notIf a borrower does not buy points to purchase a lower interest rate, there are no other fees associated with the mortgage closing that can be deducted from his taxes in most states. The interest accrued on the mortgage, however, can be deducted. The accrued interest is listed on the Form 1098 mailed to the borrower in the following calendar year.Bottom LineSome mortgage closing costs, such as points, are tax deductible, however, not all are.
