Ignite FB Tracking PixelTax Breaks and Deductions for First-Time Buyers - Brynda Cummings
Tax Breaks and Deductions for First-Time Buyers

by Brynda Cummings 12/17/2018

Buying your first home is probably one of the biggest purchases you’ll make in your life. But, it does come with its advantages. Among them are tax breaks and deductions that you can take advantage of to save money if you play your cards right.

In today’s post, I’m going to cover some of the tax breaks and deductions that first-time homeowners should seek out this tax season to help them lower their tax bill.

Mortgage points

While earning points is a good thing on the basketball court, it can be a financial drain on a mortgage. Mortgage points are what buyers pay to the lender to secure their loan. They’re usually given as percentage points of the total loan amount.

If you pay these points with your closing costs, then they are deductible. Taxpayers who itemize deductions on their IRS Form 1040 can typically deduct all of the points they paid in a year, with the exception of some high-income taxpayers whose itemized deductions are limited.

PMI costs

If you’re one of the many people who made a down payment of less than 20% on your home, odds are that you’re going to be stuck with PMI, or private mortgage insurance, until you pay off at least 20% of the loan balance.

The good news is that homebuyers who purchased their home in the year 2007 and after can deduct their PMI premiums. However, the state on premium insurance deductibles is something that frequently comes up in Congress, so homeowners should ensure that these deductions are still valid when filing their taxes.

Mortgage interest

Mortgage interest accounts for the biggest deduction for the average homeowner. When you receive your Form 1098 from your lender, you can deduct the total amount of interest you’ve paid during the year.

Property taxes

Another deductible that shouldn’t be overlooked by first-time buyers is local property taxes. Save the records for any property taxes you pay so that you can deduct them during tax season.

Home energy tax credits

Some states are offering generous tax credits for homeowners who make home improvements that save energy. There are a number of improvements you might qualify for, including things like insulation and roofs, as well as photovoltaic (PV) solar panels.

IRA Withdrawals

Many first-time buyers withdraw from an IRA account to be able to make a larger down payment on their home or to pay for closing costs. In most other cases, withdrawing from an IRA will count as taxable income. However, if your IRA withdrawal is used toward a down payment or closing costs, the tax penalty is waived.


Keep these tax breaks and deductions in mind this tax season to help you save money and get a larger refund.

About the Author

Author
Brynda Cummings

 I am excited to be back home in Florida and residing in St. Augustine. Whether you need help buying or selling a home, purchasing a second home, investment property or vacant land, I will put my expertise to work for you!
I pride myself on my ability to listen to my clients needs and connect them with the opportunities that best match those needs. I will work tirelessly for you to ensure you are connected with the best real estate opportunites.
I know first hand the challenge of relocating, selling a home and having to find a new one. I have relocated from North Florida to South Florida, New Orleans, Houston Texas and now back home in Florida in Sunny St Augustine.  

My Experience

  • Over 20 years experience.

My Credentials and Memberships

  • Certified Residential Specialist (CRS) Graduate REALTOR Institute (GRI) Member St. Johns-St Augustine Association of Realtors Member Northeast Florida Association of Realtors
  • broker-Associate

My Community Involvement

  • Harbor Island Tennis Club
  • Sunrise Rotary of Saint Augustine
  • Anastasia Baptist Church
  • Treasure Beach Property Owners Association