Tax Breaks and Deductions for First-Time Buyers

by Toni Itkin 02/25/2019

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

Toni Itkin


MEET TONI ITKIN

Toni Itkin is a licensed Realtor® serving buyers and sellers across BuckheadViningsSandy SpringsRoswellMarietta, East Cobb, and other high-profile areas of Metro Atlanta.

Toni began her real estate career in 1992 with Buckhead Brokers, where she earned "Rookie of the Year” before rapidly ascending to her status as a multi-million dollar producer. Since then, she has been consecutively featured in the Who’s Who of Atlanta Real Estate for many years.

Equipped with sharp negotiating skills, an intuitive marketing acumen, and a strong network of professional relationships, Toni is a fierce advocate for her clients. Whether it’s a one-bedroom condo or a multi-million dollar mansion estate, Toni’s ultimate goal is to find her clients a home that perfectly fits their budget and lifestyle. Toni’s reputation for professionalism and trustworthiness in and out of the brokerage community is of utmost importance to her. As a Certified Luxury Homes Specialist, Toni has a finger on the pulse of Metro Atlanta’s luxury real estate market, and as a Certified Relocation Specialist, she is uniquely positioned to provide support for homebuyers who are relocating.

Toni is a member of Georgia Association of Realtors®, National Association of Realtors®, Atlanta Board of Realtors® and Haute Residence’s Luxury Real Estate Exclusive, Invitation-only Network. Toni is also a recipient of the Atlanta Board of Realtor®’s coveted Crystal Phoenix Award, which means she’s achieved the organization’s "Multi-Million Dollar Club” status for a minimum of 25 years. As a Coldwell Banker Residential Brokerage agent, she is consistently ranked among the company’s top one percent of agents worldwide and has been recognized as an honoree of the International Diamond Society, International President’s Circle, International President’s Elite, President’s Premier, and Society of Excellence.

Toni is also very active in local charities and civic organizations, including Habitat for Humanity, the Best Friends Animal Society and the Atlanta and Cobb County Humane Societies. In addition, a portion of Toni’s sales commission on every closed transaction goes directly to the Cares Foundation, which makes a difference in Atlanta communities by supporting a variety of local charitable organizations.  She lives in East Cobb and enjoys traveling, playing golf and tennis, and spending time with her pets and her husband, Ernie, a Cardiothoracic Surgeon.