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.

Key Takeaways:

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.

Deductible Refinance Expenses: What You Can Claim?

1. Mortgage Interest

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

2. Real Estate Taxes Paid at Closing

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.

3. Points Paid to Refinance

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.

Non-Deductible Costs to Watch Out For

You can’t deduct:

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.

Hidden Opportunities: Adjusted Cost Basis

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.

Conclusion: Save Now, or Save Later—Either Way, Be Smart

Refinancing can unlock more than just lower monthly payments. With smart tax planning, it can unlock real savings too. But only if you understand the rules.

And here’s where platforms like realpha and Be My Neighbor Mortgage come in:

Be My Neighbor Mortgage (NMLS #1743790) offers clarity, flexibility, and guidance, especially helpful when navigating tax-time choices.
realpha empowers homebuyers through a commission-free buying experience and partners with lenders like BMN to streamline the entire journey.

No commissions. No surprises. Just a smarter way to buy or refi.

FAQs

Are refinancing points tax-deductible?

Yes, but typically over the life of the loan unless used for home improvement and certain IRS conditions are met.

Can I deduct closing costs on a refinance?

Most closing costs are not deductible, except for property taxes and potentially some points.

Is mortgage insurance (PMI) deductible?

As of recent tax rules, PMI deductions have not been extended past 2021, but check the latest IRS updates or consult your CPA.

Do I need to itemize to deduct refinance costs?

Yes. You must itemize deductions using Schedule A to claim any of these.

What if I refinance with cash-out?

The deductible portion applies only to the original mortgage balance. Funds used for anything else (like debt consolidation) may affect deductibility.

Compliance Disclosures:

This content is provided for informational purposes only and should not be considered tax, legal, or financial advice.
Mortgage rates, deductions, and IRS rules are subject to change. Always consult a licensed tax professional.
NMLS #1743790 – Be My Neighbor Mortgage, an Equal Housing Lender.
BMN and realpha maintain a strategic partnership; realpha operates as a commission-free home buying platform, not a mortgage lender.
All loans are subject to underwriting approval. Terms and conditions apply.

This is not a commitment to lend.

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.

Key Takeaways:

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.

Deductible Refinance Expenses: What You Can Claim?

1. Mortgage Interest

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

2. Real Estate Taxes Paid at Closing

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.

3. Points Paid to Refinance

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.

Non-Deductible Costs to Watch Out For

You can’t deduct:

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.

Hidden Opportunities: Adjusted Cost Basis

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.

Conclusion: Save Now, or Save Later—Either Way, Be Smart

Refinancing can unlock more than just lower monthly payments. With smart tax planning, it can unlock real savings too. But only if you understand the rules.

And here’s where platforms like realpha and Be My Neighbor Mortgage come in:

Be My Neighbor Mortgage (NMLS #1743790) offers clarity, flexibility, and guidance, especially helpful when navigating tax-time choices.
realpha empowers homebuyers through a commission-free buying experience and partners with lenders like BMN to streamline the entire journey.

No commissions. No surprises. Just a smarter way to buy or refi.

FAQs

Are refinancing points tax-deductible?

Yes, but typically over the life of the loan unless used for home improvement and certain IRS conditions are met.

Can I deduct closing costs on a refinance?

Most closing costs are not deductible, except for property taxes and potentially some points.

Is mortgage insurance (PMI) deductible?

As of recent tax rules, PMI deductions have not been extended past 2021, but check the latest IRS updates or consult your CPA.

Do I need to itemize to deduct refinance costs?

Yes. You must itemize deductions using Schedule A to claim any of these.

What if I refinance with cash-out?

The deductible portion applies only to the original mortgage balance. Funds used for anything else (like debt consolidation) may affect deductibility.

Compliance Disclosures:

This content is provided for informational purposes only and should not be considered tax, legal, or financial advice.
Mortgage rates, deductions, and IRS rules are subject to change. Always consult a licensed tax professional.
NMLS #1743790 – Be My Neighbor Mortgage, an Equal Housing Lender.
BMN and realpha maintain a strategic partnership; realpha operates as a commission-free home buying platform, not a mortgage lender.
All loans are subject to underwriting approval. Terms and conditions apply.

This is not a commitment to lend.

What Mortgage Refinancing Costs Are Tax-Deductible?

Key Takeaways:

Deductible Refinance Expenses: What You Can Claim?

1. Mortgage Interest

2. Real Estate Taxes Paid at Closing

3. Points Paid to Refinance

Non-Deductible Costs to Watch Out For

You can’t deduct:

Hidden Opportunities: Adjusted Cost Basis

Conclusion: Save Now, or Save Later—Either Way, Be Smart

FAQs

Are refinancing points tax-deductible?

Can I deduct closing costs on a refinance?

Is mortgage insurance (PMI) deductible?

Do I need to itemize to deduct refinance costs?

What if I refinance with cash-out?

Compliance Disclosures:

What Mortgage Refinancing Costs Are Tax-Deductible?

Key Takeaways:

Deductible Refinance Expenses: What You Can Claim?

1. Mortgage Interest

2. Real Estate Taxes Paid at Closing

3. Points Paid to Refinance

Non-Deductible Costs to Watch Out For

You can’t deduct:

Hidden Opportunities: Adjusted Cost Basis

Conclusion: Save Now, or Save Later—Either Way, Be Smart

FAQs

Are refinancing points tax-deductible?

Can I deduct closing costs on a refinance?

Is mortgage insurance (PMI) deductible?

Do I need to itemize to deduct refinance costs?

What if I refinance with cash-out?

Compliance Disclosures:

Further Reading