What Mortgage Refinancing Costs Are Tax-Deductible? | reAlpha Mortgage

Let’s be honest: the refinance process can feel like alphabet soup—APR, DTI, LTV—and now, the tax code too? If you’ve refinanced or plan to in 2025, you’re likely wondering: Can I write any of this off come tax time?

Short answer? Some costs, yes; many no. But the deductions you can take might save you hundreds, or more, if you play it smart. This guide breaks it all down.

• Not all refinance costs qualify for tax deductions; know the difference.
• Mortgage interest and some points may be deductible if certain conditions are met.
• Property taxes paid at closing can often be written off.
• Closing costs, appraisal fees, and title insurance are generally not deductible.
• Work with a tax professional to optimize your deductions and avoid errors.

You can generally deduct:

• Mortgage interest (on a qualified residence loan)
• Real estate taxes paid at closing
• Points paid to acquire the loan (if certain criteria are met)

You can’t deduct:

• Appraisal fees, title insurance, or notary fees
• Legal fees and document prep charges
• Costs that increase your home’s basis (though those may help when you sell)

Let’s sort through the confusion.

If your new loan is used to refinance your primary or secondary residence and meets IRS guidelines, the interest is usually deductible, up to a limit.

Pro Tip: For loans originated after Dec. 15, 2017, the interest deduction is capped at $750,000 in mortgage debt.

Make sure:

• The refinanced loan doesn't exceed the balance of the original loan
• You’re itemizing deductions on your tax return

If your lender collects property taxes at closing or escrow, that amount is generally deductible in the year paid.

Heads up: You’ll need Form 1098 from your lender to file this correctly.

Points = prepaid interest. You may deduct them over the life of the loan, not all at once, unless the funds were used to substantially improve the home and other conditions are met.

• Title insurance
• Notary fees
• Credit report fees
• Loan origination or underwriting fees
• Attorney fees related to the loan
• Appraisal costs

These are considered part of the cost of obtaining a loan and are not tax-deductible under IRS rules.

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While not immediately deductible, some refinance costs can increase your home’s basis. That means potential savings later when you sell and calculate capital gains.

Example: A $600 appraisal fee isn’t deductible now, but added to your cost basis, it could reduce your tax hit down the road.

Refinancing or buying your home doesn’t have to cost a fortune. With reAlpha, you can get up to 75% of your buyer agent’s commission back - real money that can offset taxes, closing costs, or even a full month’s mortgage payment.

Here’s how the rebate works:

• 25% back when you use a reAlpha agent

• 50% back when you also close with reAlpha Mortgage

• 75% back when you bundle reAlpha Title too

Ready to refinance or buy smarter? Start saving with reAlpha Mortgage.

Yes, but typically over the life of the loan unless used for home improvement and certain IRS conditions are met.

Most closing costs are not deductible, except for property taxes and potentially some points.

As of recent tax rules, PMI deductions have not been extended past 2021, but check the latest IRS updates or consult your CPA.

Yes. You must itemize deductions using Schedule A to claim any of these.

The deductible portion applies only to the original mortgage balance. Funds used for anything else (like debt consolidation) may affect deductibility.

• This content is provided for informational purposes only and should not be considered tax, legal, or financial advice.
• Mortgage rates, deductions, and IRS rules are subject to change. Always consult a licensed tax professional.
• NMLS #1743790 - reAlpha Mortgage, an Equal Housing Lender.
• reAlpha is a homebuying platform that helps you earn up to 75% of your buyer agent's commission back. reAlpha Mortgage is a licensed mortgage lender and part of the reAlpha network.
• All loans are subject to underwriting approval. Terms and conditions apply.

This is not a commitment to lend.

Find the Perfect Mortgage for Your Dream Home with reAlpha Mortgage.

Compare options, calculate payments, and get expert guidance - all in one place.

Check if you qualify