Close before December 31 to deduct mortgage interest for the current tax year. Year-end closings offer significant tax advantages for eligible homebuyers.
If you close before the end of the year, you can deduct the mortgage interest and property taxes you pay at closing on that year's tax return, subject to IRS limits.
Tax Deduction Timing
Mortgage interest paid at closing, including prepaid interest and discount points, may be deductible on your federal tax return for the year you close. To qualify, you must close on or before December 31. The deduction applies to mortgage interest on up to $750,000 of qualified residence debt for most taxpayers. For buyers in San Antonio and the Texas Hill Country, year-end closings can provide meaningful tax savings.
Year-End Closing Strategy
If you want to close before year end, plan your home search and rate lock accordingly. Start the process early in the fall to allow time for finding a home, negotiating a contract, completing inspections, and processing the loan. A 45- or 60-day rate lock may be appropriate to ensure your lock covers any holiday-related processing delays and still closes before December 31.
