What Mortgage Refinancing Costs Are Tax-Deductible?

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.

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Check If You Qualify

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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Find your dream home

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.

Buying a home is a big decision - and having the right information puts you ahead. But the real advantage comes from pairing smart research with a smarter way to buy.

When you use a reAlpha real estate company, you can be eligible to receive up to 1% of the home purchase price back as a credit at closing. Add reAlpha Mortgage, and that rebate can increase to up to 1.5% back, helping offset closing costs and keep more money in your pocket when it matters most.

The rebate is simple, transparent, and applied directly at closing - no complicated hoops, no delayed payouts. Just real savings tied to using a fully integrated homebuying experience.

See how much you could save:

• Check your eligibility
• Explore homes that fit your budget today.
• Your next move could come with thousands back at closing.

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