Closing Costs You Can Deduct This Year
IRS Publication 530 limits deductible closing costs to home mortgage interest and certain real estate taxes. You claim them in the year you buy, if you itemize. To itemize means listing deductions one by one on Schedule A (Form 1040) instead of taking the standard deduction.
Itemizing only helps when your deductions beat the standard deduction. The IRS 2026 inflation adjustment release sets these amounts:
| Filing status | 2026 standard deduction |
|---|---|
| Single | $16,100 |
| Married filing separately | $16,100 |
| Head of household | $24,150 |
| Married filing jointly | $32,200 |
Learn how the standard deduction works and how tax credits and deductions differ.
Points on Your Mortgage
Points are upfront mortgage charges figured as a percentage of the loan principal. IRS Topic No. 504 lets you deduct them in full the year you pay them on a loan to buy, build or improve your main home if:
- You use the cash method of accounting.
- The mortgage is secured by your main home.
- Paying points is an established practice in your area.
- The points don’t exceed what’s generally charged there.
- You paid at least that amount at or before closing, using funds not borrowed from the lender or broker.
- The points are computed as a percentage of the principal.
- Your settlement statement clearly shows them as points.
Points charged in place of other costs, like appraisal or attorney fees, aren’t deductible as interest.
Prorated Property Taxes
At closing, the seller is treated as paying real estate taxes up to, but not including, the sale date, and you pay from that date on.
In the Publication 530 example, you bought on Sept. 1, and the seller paid the full $730 annual tax. You owned the home for 122 days, so your share is 122/365 (0.3342), or $244, on Schedule A, line 5b.
Closing Costs That Go Into Your Home’s Basis
Basis is generally what your home cost you. A fee belongs in basis if you’d have paid it even when buying with cash. Publication 530 includes:
| Type of cost | What’s included |
|---|---|
| Title and legal costs | Abstract of title fees; legal fees for the title search and for preparing the sales contract and deed |
| Government fees and taxes | Recording fees; transfer or stamp taxes |
| Property setup | Surveys; charges to install utility services |
| Insurance | Owner’s title insurance |
| Seller’s costs you agree to pay | Back taxes or interest, recording or mortgage fees, repairs or improvements and sales commissions |
Closing Costs That Do Neither
Publication 530 says these costs aren’t deductible and aren’t added to basis:
- Fire insurance premiums
- Utilities or services tied to living in the home before closing
- Rent for occupying the home before closing
- Loan charges, such as assumption fees, credit reports, lender-required appraisals and mortgage insurance premiums
Seller-Paid Items That Lower Your Basis
Seller-Paid Points
If you bought after April 3, 1994, subtract any points the seller paid from your basis. Publication 530 then treats those points as paid by you, so they can still qualify for the deduction.
Seller-Paid Property Taxes
If the seller paid your share of real estate taxes and the settlement didn’t charge you for it, reduce your basis by that amount.
Why Your Basis Matters When You Sell
When you sell, your sale price is measured against your basis. Later improvements raise it, so keep your settlement statement and improvement receipts.
