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Tax Deductible Rewards of Home Ownership in Texas

Reap the tax deductible rewards of home ownership in Texas.

If you’ve purchased, sold or refinanced your home in the past year, tax season is the best time to reap the benefits of being a homeowner! Take advantage of these tax breaks today and you could enjoy a bigger return in April!

Mortgage Interest. For most homeowners, the bulk of your mortgage payment is going towards interest – and that’s a big tax break for you! The mortgage interest on your primary residence is fully tax deductible, unless, of course your loan is more than $1 million.

You can also deduct late payment charges as home mortgage interest as long as the payment was not late due to a specific service received in connection with your home loan. Also, if you pay off your mortgage early and incur a prepayment penalty, you can deduct that penalty as home mortgage interest (subject to the same requirements for late payments).

Property Taxes. Your property taxes - the annual taxes based on the assessed value of your property – can also be deducted. Your mortgage interest statement may list the amount of real estate taxes you paid if your taxes and homeowners' insurance went into an escrow account when you closed on your mortgage. You can also review your cancelled checks to determine your total real estate tax deduction.

Loan Points. Any points you paid to get a better rate on a home loan, are tax deductible in the year you made the purchase as long as:

  • The loan is secured by your primary residence and it was used to buy, improve or build the home.
  • Paying points is an established business practice in your area;
  • The points are computed as a percentage of the loan principal;
  • The points are clearly defined on the buyer's settlement statement; and
  • You put cash into your home purchase in an amount at least equal to the points you were charged.

Loan Points on a Refi. The points you paid on a refinanced loan may also be tax deductible, however in most cases, the points must be deducted over the life of the new loan. So if you paid $2,000 in points to refinance a 30-year mortgage, you can deduct $5.56 per monthly payment, or a total of $66.72 if you made 12 payments in one year on the new loan.

Interest on a Home Equity Loan. The interest on a home equity loan may be tax deductible up to $100,000. However, if your home equity loan, when combined with your first mortgage amount, increases the debt on your home to an amount more than the property's actual value, you’ll face deductibility limits. In these cases, the IRS allows you to deduct the smaller of interest on a $100,000 loan or your home's value less the amount of your existing mortgage.

Talk with a CPA. I am sharing the information above so that you are aware of your options. It is always best to speak with a CPA regarding what you can and what you cannot write-off for your taxes.



Are you looking to purchase a Texas home?  Perhaps you love your Texas home but would be interested in refinancing your Texas mortgage to a lower interest rate?  

I'll help you get pre-approved for your Texas home loan and even suggest some very knowledgeable and professional Real Estate Agents in your area of choice.  If you are available to talk, I am available to listen.  Give me a call or visit my website for more details.

Do you want to know all of your mortgage options? Call me today and let's discuss them further.

Texas Home Loan Consultant

Always available for your Texas Mortgage and Home Loan needs!

John R Cannata    P#214.728.0449

NMLS # 322646

Texas Home Loan Expert

Frisco TX Mortgage



The views expressed on this site are mine alone and do not reflect the views of my employer.

Comment balloon 6 commentsJohn Cannata • December 20 2011 10:46PM


great tips John, we close on our refi Friday the appraisal came back today its all good :)

Posted by Marilyn Boudreaux, Lake Charles LA Century 21 Realtor (Marilyn Boudreaux, Century 21 Bono Realty) almost 8 years ago

John - great tips. Let's hope they still have their paper work from when they close. :)

Posted by Mike Yeo (3:16 team REALTY) almost 8 years ago

Thank you Marilyn and Mike!

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 almost 8 years ago

Always some good advice for today's homeowners; thanks for sharing, John.

Posted by Teral McDowell (Referral Patners LLC) almost 8 years ago

Great tax deductible information for Texas home owners. Have a great holiday John!

Posted by Eileen Hsu, LICENSED REAL ESTATE SALESPERSON (Douglas Elliman Real Estate) almost 8 years ago

Thank you Teral and Eileen. I appreciate the comments and wish you both a Happy Holiday.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 almost 8 years ago