While most closing costs are not tax-deductible, there are a few that may qualify. Helping you identify those opportunities can add real value, giving you the chance to make more informed financial decisions during one of the biggest transactions of your life.

It’s worth noting that, according to the IRS, there are fewer than 300,000 qualified tax preparers in the United States—serving a population of roughly 340 million. That means clear, reliable tax guidance can be hard to find. By pointing out legitimate opportunities to save, we can help ensure you’re well-positioned and supported, while also connecting you with trusted tax professionals when needed.

What are mortgage loan closing costs?

Mortgage loan closing costs are the expenses incurred when a client gets a mortgage loan (whether it’s for a purchase or refinance). They are for the services that make the transaction possible. For example, as part of determining your eligibility for a mortgage loan, a lender may need to obtain a copy of your credit report. This cost is then passed on to you as the borrower.

Closing costs generally range from 2% to 4% of the purchase price or loan amount. They’re required on top of any down payment requirement, and explaining this to clients upfront can help reduce any unpleasant surprises and allow them to create a realistic budget from day one. Your loan estimate (LE) or closing disclosure (CD) is the document that outlines all of these fees.

What Closing Costs Are Tax-Deductible?

When you’re buying a home, one of the most common questions is: “Are closing costs tax-deductible?” While it would be nice if the answer were “all of them,” the reality is that only a few closing costs qualify. But the ones that do can still add up to meaningful savings.

Mortgage Interest

The portion of your payment that goes toward mortgage interest is deductible each year you own a qualified home (typically your primary or secondary residence). For 2025, you can deduct interest on up to $750,000 of your loan ($375,000 if married filing separately).

If you’re refinancing, you may also be able to deduct mortgage interest that’s paid upfront as part of your loan payoff.

Discount Points

Discount points (sometimes called mortgage points) are fees you can pay at closing in exchange for a lower interest rate. Because they’re treated as prepaid interest, you can often deduct the full amount—provided certain IRS rules are met.

Generally, to qualify:

• The mortgage must be for your primary residence.

• Points must be a percentage of the loan and considered standard in your area.

• You must pay them upfront, not with borrowed funds.

• They must be clearly itemized on your loan documents.

(For loans over $750,000—or $1 million if originated before Dec. 15, 2017—deductions may be limited.)

Property Taxes

Property taxes are sometimes collected at closing so they can be paid on time, especially if your first mortgage payment isn’t due for a couple of months. While this feels like a “closing cost,” it’s really just your normal property tax bill.

The good news: You can generally deduct up to $10,000 in property taxes each year ($5,000 if married filing separately).

Common Closing Costs That Are Not Typically Tax-Deductible

When you buy a home, it’s natural to wonder which of your closing costs can be written off at tax time. The reality is that most closing costs are not deductible. That said, knowing which ones aren’t—and how they work—can help you plan ahead and avoid surprises. Always consult with a trusted tax advisor to confirm what applies in your situation.

Appraisal

Most lenders require an appraisal to confirm the property’s value and condition. A licensed appraiser visits the property, evaluates it, and provides a report to the lender. While necessary, this fee isn’t tax-deductible.

Home Inspection

Unlike an appraisal, a home inspection is for your benefit as the buyer. It identifies structural, mechanical, or safety issues, such as problems with the roof, foundation, plumbing, or HVAC. While incredibly valuable for peace of mind, inspection costs can’t be deducted.

Title Search & Title Insurance

A title search ensures the seller truly owns the home and that there aren’t any outstanding liens or claims. Title insurance then protects the lender (and sometimes the buyer) if an ownership dispute or error arises later. Both are standard closing costs—but not deductible.

Government Recording Fees

Your county charges recording fees to make your new ownership official in the public record. This covers the deed, mortgage, and related legal documents. These fees protect your ownership rights, but again, they are not deductible.

Loan Origination Fees

Lenders often charge an origination fee to cover underwriting, processing, and administrative costs. While part of nearly every mortgage, this fee cannot be deducted.

Home-Related Expenses

Expenses like HOA dues, homeowners’ insurance, and flood insurance—whether paid at closing or separately—are also not deductible.

Special Note: Rental Properties

If you’re buying a rental property, the rules are different—and more favorable. Many closing costs on rental properties are either deductible right away (like mortgage interest, points, and real estate taxes) or can be added to your property’s basis.

Your basis is essentially your investment in the property. Increasing your basis can reduce taxable gains when you sell, so even “non-deductible” costs may benefit you in the long run.

Tips for Managing Deductions

• Stay organized: Keep copies of closing statements, mortgage statements, tax bills, and insurance records in a dedicated folder (physical or digital).

• Work with a professional: A qualified tax preparer can help ensure you claim everything you’re entitled to—and avoid costly mistakes.