Buyer taxes · IRS Publication 530Deducting mortgage points and closing costs the year you buy a home
Points are prepaid interest, so the general rule is to deduct them over the life of the loan. They are fully deductible in the year paid when, among other tests in IRS Publication 530, the loan is secured by and used to buy or build your main home, paying points is an established practice in the area and the amount is not more than usual, you use the cash method, the points are not in place of separately stated fees, they are figured as a percentage of the loan and clearly shown on the settlement statement, and the funds you brought to closing (not borrowed) plus any seller-paid points at least equal the points charged. Points the seller pays are treated as paid by the buyer – deductible under the same tests – but the buyer must reduce the home's basis by them. Lender fees for specific services (appraisal, notary, preparing the note) are not interest, and transfer or stamp taxes are not deductible: a buyer adds them to basis.
Points deductible in the year paid – all tests (Pub. 530)
1. Main home
The loan is secured by your main home.
2. Local practice
Paying points is an established business practice where the loan was made.
3. Usual amount
The points were not more than generally charged in that area.
4. Cash method
You report income when received and deduct expenses when paid (most individuals).
5. Not other fees
Not paid in place of appraisal, inspection, title, attorney fees or property taxes.
6. Your own funds
Funds you provided at or before closing (down payment, earnest money – not borrowed) plus seller-paid points are at least the points charged.
7. To buy or build
The loan is used to buy or build your main home.
8. Percentage
The points were figured as a percentage of the principal amount.
9. On the statement
The amount is clearly shown on the settlement statement as points charged for the mortgage – paid from your funds or the seller's.
Seller-paid points
- The buyer treats them as if the buyer paid them and deducts them under the same tests (otherwise over the life of the loan).
- The buyer reduces the home's basis by the seller-paid points.
- The seller cannot deduct them as interest; they are a selling expense that reduces the amount realized (Pub. 523).
Not deductible – added to basis or not at all
- Appraisal, notary and loan document preparation fees – charges for services, not interest.
- Transfer or stamp taxes – the buyer adds them to basis; for the seller they are a selling expense.
- Mortgage insurance premiums – Publication 530 for 2025 returns says the itemized deduction has expired.
- HOA assessments – imposed by the association, not by a government.
Questions buyers ask
Are points deductible when you buy a house?
Yes, in the year paid if all of IRS Publication 530's tests are met; otherwise over the life of the loan.
Can I deduct points the seller paid for me?
Yes, as if you paid them, under the same tests – and you reduce your home's basis by that amount (IRS Publication 530).
Are closing costs tax deductible?
Most are not. Points and your share of property taxes can be; appraisal, title and transfer taxes are not and generally go into the home's basis (IRS Publication 530).
Related guides
ClosingCode keeps the final settlement statement on every deal, so a client who asks for it at tax time gets it in a minute – in English or Spanish.
Start free trialSource: IRS Publication 530, Tax Information for Homeowners, for use in preparing 2025 returns (irs.gov/pub530, read October 25, 2026).
General information, not legal, tax or financial advice. ClosingCode is software; it is not a law firm, tax preparer, lender or brokerage. This guide is not a substitute for the advice or services of an attorney.