Part 2: Lessons from Real Home Buyers - Quicken Loans Zing BlogPurchasing a home is a life-changing event. You’re suddenly responsible for a number of things you may not have been responsible for if you rented in the past, including mowing the lawn, shoveling the driveway or repairing a leaky roof. There’s a whole other aspect to owning a house apart from a few additional chores, though. Your home also affects your taxes.

If you’re already a homeowner, this probably isn’t news to you. However, if you’re in the market for your first home, I’ve got some valuable information for you. Below you can find information about what you can and can’t deduct, along with other tips for tax season!

What Can Be Deducted

Mortgage Interest

A new mortgage means a little more work for you when it comes time to file your taxes. However, the extra work is worth it in the end. Perhaps the most important tax deduction you need to be aware of is your mortgage interest. At year-end, check out Form 1098 from your lender to see how much mortgage interest you’ve paid.

Mortgage Points

Simply put, mortgage points are prepaid interest. You can purchase points to lower your interest rate when you get your loan. By purchasing points, you can save money in the long run if you stay in the home for a certain period of time, depending on the amount of points you purchase.

For example, if you have a $200,000 mortgage and buy two points, you’ll owe $4,000 for those points at closing. (Each point is 1% of the value of your mortgage.) If buying the points lowers your payment $250 a month, you’ll have to stay in your home for at least 16 months to break even. After that time passes, you’ll start putting money back in your pocket.

Are you eligible to deduct money you spent on mortgage points from your taxes? Each situation is different, but it’s worth looking into!


Property Taxes

Owning a home also gives you the responsibility of paying property taxes. In most cases, your taxes are rolled into your monthly mortgage payment, and your mortgage company pays your taxes from your escrow account when they’re due.

If you’re a first-time home buyer, you’ll need to know the total real estate taxes for the real property tax year and the number of days in the property tax year that you owned the property

Private Mortgage Insurance (PMI)

Thanks to a bill the Senate approved in late December 2014, homeowners can deduct the cost of mortgage insurance premiums on their 2014 tax forms. The tax break covers PMI premiums and premiums paid on FHA, VA and Rural Housing Service guaranteed loans, according to an article on National Mortgage News.

What Can’t Be Deducted

  • Property hazard insurance premiums
  • Homeowners association dues
  • General closing costs
  • Home repairs

As you can see, purchasing your first home can have a major impact on your taxes. With a little research and perhaps some help from your local tax professional, you can recoup some of the costs associated with owning your home.

Have a question or comment? Let us know in the section below!

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This Post Has 80 Comments

  1. Can we deduct the price from our home if we buy it out right other from than a mortgage company when filing our taxes?

    1. Hi Sharon:

      Unfortunately, you can’t deduct the price of your home. Only mortgage interest can be deducted.

      Kevin Graham

  2. I purchase a home in March 2016 people keep telling me I should of receive a $8,000 back for 1st time home owner but my tax person said she never heard of nothing like that she is also my realtor. Should I have gotten this.
    Thank you,

    1. Hi Ann:

      The federal government at one point had a first-time home buyer tax credit, but that program ended several years ago now. Different states and municipalities may have their own home buying incentives. As your tax person is also a realtor, I would think they would know if such incentives existed in your area. Of course, you can always get a second opinion, but either way, I would recommend talking to a tax professional about this.

      Kevin Graham

    1. Hi Nicole:

      You can claim things like any mortgage interest paid in 2016. However, since your closing was so recent, if your first bill didn’t come until January, you would claim it on your 2017 return. You can, however, deduct any prepaid mortgage interest points and property taxes paid upfront. You may also be able to deduct mortgage insurance payments. There are restrictions on all of these things and I would advise checking out this publication from the IRS and consulting a tax preparer if you are unsure.


  3. Are prepaid real estate taxes from settlement sheet included in the real estate tax payment amount that is reported on the 1098 from Quicken Loans ?

    1. Hi Annie:

      I’m assuming you mean in terms of tax tips. In addition to the above, many states have their own programs and tax credits/deductions for first-time home buyers. The quickest way to find out if that’s the case in your state is to Google. Let us know if you have any other questions.

      Kevin Graham

  4. I purchased my home December 2 2015, I live in NY. I’ve heard of a first time home buyers credit. However I don’t know where to look for it on my return or if I received any kind of credit. I wound up owing the state. Does any of that make any sense? I’m confused and just want to make sure my return was done accurately.
    Thank you

    1. Hi AnnMarie:

      We hesitate to give specific tax advice because it varies so much from state to state. I can tell you that the federal first-time home buyer credit no longer exists, but there may be credits you can get in New York or in your local municipality. My recommendation would be to do some hunting on the Internet. If you find you missed a credit, you can always file an amended return.

      Kevin Graham

  5. Hi,

    I bought my home in May 2015. Filed my taxes with Turbo Tax but it did not let me deduct anything. So basically I didn’t get anything for buying my home in 2015. Not even the taxes or interest that I have paid. What can I do now. Thanks.

    1. Hi Faisal:

      You can file an amended return at this point. My only concern is that TurboTax should have picked that up. Many home deductions are extremely common. I might check with an accountant at this point if I were you so you can make sure you fill everything out right.

      Kevin Graham

  6. Bought a house in August 2015 with my partner in MA. We are not married so we file on our own. What do we do about the house. We are both on the mortgage.


    1. Hi GC:

      if you split the payment, you can claim your share of the interest for tax purposes. It’s the same thing with deductible property taxes. For more information, check out this page on the IRS website.

  7. Is there a credit for being a first time buyer in 2015? Not simply the interest that everybody can claim, but a credit for buying a house for the first time?

    1. Hey Didier,

      There is no federal first-time home buyer tax credit, but there may be one in your state of residence. States have different programs available. Hope this helps!


  8. Hi Kevin,
    yes they can take off the interest and real estate taxes if by Itemizing their deduction, but if by doing that they don’t come up over the standard deduction. The tax programs will not use those deductions and it will not show up on their tax return. Hope this may help of explaining why it might not show up.

  9. I bought my first home back in Jan 2015. I went to go and get my taxes done this year and when he had me check them over nothing from buying the house was on my taxes. He said something about not having enough or the Federal amount was great not really sure what he was talking about. Does this sound correct to you? What can I deduct from my taxes: Can I deduct my closing cost? I just thought is was strange that nothing would go on my taxes for the house.

    1. Hi Shara:

      Most people can deduct all of their mortgage interest. Your lender should have sent you something called a 1098 which you append to your tax return. There are instances in which you can’t fully deduct your mortgage interest, but you should be able to deduct something. I’m going to give you a link to the IRS home mortgage interest deduction publication. It’s not exactly light reading, but you may find the diagram on page 3 helpful. In terms of closing cost, you probably can’t deduct the whole thing, but you should be able to deduct any prepaid mortgage interest points. You can also deduct any property taxes paid either at closing or since you’ve been in the house.

      Kevin Graham

      1. the amount of interest and real estate taxes paid as a first home buyer also depends on when you bought your home. If purchased more towards the end of year you’ve paid in less interest than a full year’s interst would add up too. Also If you don’t have other itemized deuctions like no state income tax like Florida, and less than a years mortgage interest and real estate taxes , it’s possible that your standard deduction is higher than these itemized. Also depends on your mortgage amount… many variables can play a role in you ablility to exceed your standard marital status .. single vs. married have different standard deductions.. Always review the figures on your return for accurateness
        And don’t worry if you ? what tax preparer did. That means you are a smart consumer..they should kindly answer your questions..

    1. Hi Andrea:

      Given the timeframe of your purchase, you can deduct the cost of any prepaid interest points you paid upfront at closing. Any interest paid on the actual mortgage payments would be deducted on your 2016 return. You can also deduct any property taxes or mortgage insurance premiums paid upfront. Hope this helps!

      Kevin Graham

    1. Sara:

      Any interest you paid on the mortgage of your primary or second home is generally deductible. We recommend double checking with a tax adviser who can learn more about your personal financial profile.

      Kevin Graham

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