If you’re buying or selling a home, you’re probably wondering whether closing costs can help lower your tax burden. The answer isn’t always straightforward, but certain closing costs are tax-deductible under IRS guidelines. Understanding what qualifies can save you thousands when tax season rolls around.
What Closing Costs Are Tax Deductible in 2025?
The IRS allows deductions on specific closing costs, but not all of them. Below is a breakdown of tax-deductible and non-deductible closing costs for homeowners in 2025:
Tax-Deductible Closing Costs
| Deductible Closing Cost | Buyers | Sellers |
|---|---|---|
| Mortgage Interest | ✅ | ❌ |
| Property Taxes (up to $10,000) | ✅ | ✅ |
| Discount Points | ✅ | ❌ |
| Mortgage Insurance Premiums | ✅ | ❌ |
| Home Office Deduction (if applicable) | ✅ | ✅ |
| Selling Expenses (staging, legal fees, commissions) | ❌ | ✅ |
Non-Deductible Closing Costs
- Title insurance
- Home appraisal fees
- Home inspection fees
- HOA fees
- Attorney fees (unless for business properties)
What Closing Costs Are Tax Deductible When Buying a Home?
If you purchased a home in 2025, you might be able to write off:
✅ Mortgage Interest: Deduct interest paid on your loan (up to $750,000 in mortgage debt for single filers, $375,000 for married filing separately).
✅ Discount Points: If you prepaid interest points to lower your mortgage rate, you may deduct them in the year of purchase.
✅ Property Taxes: The IRS allows deductions of up to $10,000 for property taxes paid.
✅ Mortgage Insurance Premiums: If you pay PMI, VA funding fees, or FHA insurance, you might qualify for deductions based on your income level.
Example Tax Savings:
| Home Price | Property Tax (1.2%) | Deduction Amount |
| $600,000 | $7,200 | ✅ Deductible |
| $1,200,000 | $14,400 | ❌ Deductible only up to $10,000 |
What Closing Costs Are Tax Deductible When Selling a Home?
Selling your home comes with various fees, but some costs can be deducted. Here’s what you can write off:
✅ Real Estate Commissions: The IRS considers agent commissions a selling expense, making them deductible.
✅ Home Improvement Costs: If you made renovations to improve your home’s value before selling, they may be deductible as capital improvements.
✅ Marketing & Staging Fees: If you paid for staging, professional photography, or online advertising, these may count as deductible selling expenses.
✅ Property Taxes (prorated): If you paid taxes for the part of the year you owned the home, they remain deductible.
Can You Write Off Closing Costs on Taxes? Our Key Takeaways
- Mortgage interest, property taxes (up to $10,000), and discount points remain deductible in 2025.
- Title insurance, home inspections, and HOA fees are not deductible.
- Sellers can deduct commissions, marketing fees, and home improvements if they contribute to the sale.
Need Help Navigating the Home Selling Process?
At XLNC Exotic Homes San Diego, we specialize in making the home-selling process hassle-free. Get a free consultation today and see how much your home is worth!
Related External Resources:
- IRS Tax Benefits for Homeowners
- San Diego Real Estate Market Trends 2025
- Mortgage Tax Deductions Explained
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