"Are mortage closing costs tax deductible?" is a common question, and while there is one type of mortgage loan closing costs that is typically tax deductiable - the better question is should I avoid this costs all together?

As with any tax question you should consult a tax advisor for your specific situation, but as an accurate general statement the only item that is tax deductible when it comes to closing costs are loan "Discount Points."

Loan discount points are charged to a mortgage's closing costs to "buy down" a lower rate, so in effect you are prepaying mortgage interest, and is the case for most borrowers mortgage interest is tax deductible.

You can identify line the amount you paid in Discount Points as item 0802 on your HUD-1 settlement statement, or a good faith estimate of costs. There is a simple mathematically equation that we illustrate in our guide to mortgage costs to see if the discount points are costing you more than they are worth.

Using our guide, we will teach you how to save hundreds of dollars in closing costs and you will learn what every part of the GFE (Good Faith Estimate) contains. You will have the necessary skills to know if you are being taken advantage of and you can in turn find the best deals for yourself. Also, learn what goes into your interest rate and how a higher or lower interest rate effects you and your broker.


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