Yes, but far fewer people get one than expect to: mortgage interest and property tax are deductible only if you itemize, and since the standard deduction roughly doubled in 2018 the large majority of homeowners take the standard deduction and get no housing-specific benefit at all.
This is general information and not tax advice, and the details change with each year's law and with your own return. What follows is the shape of it, so you know what to ask a preparer about.
The deductions that exist
- Mortgage interest, on up to $750,000 of debt for loans taken after December 2017, and $1 million for older ones.
- State and local taxes including property tax, which have been subject to a combined cap since 2018. This is the line that most often stops a homeowner from itemizing.
- Points paid to buy down the rate on a purchase, generally deductible in the year paid.
- Mortgage insurance premiums, which have gone in and out of deductibility depending on the year and the law.
Why most people get nothing
Itemizing only helps if the itemized total exceeds the standard deduction. A typical first purchase, at a moderate price, produces interest and property tax that add up to less than the standard deduction for a married couple, so the return looks exactly the same as it did while renting.
The buyers who do benefit are the ones with a large mortgage, a high rate, high property taxes, or substantial charitable giving to add to the pile. That is a real group, and it is not the median buyer.
The bigger benefit is at the other end
The capital gains exclusion on a primary residence is worth more than the annual deductions to most owners: up to $250,000 of gain excluded when single, $500,000 when married filing jointly, if you owned and lived in the home for two of the previous five years.
There are also first-time buyer programs, down payment assistance and mortgage credit certificates that vary by state and county. They are not tax deductions, they are separate programs, and they are worth asking a local lender about because they are rarely advertised.
Questions people ask
Can you write off closing costs?
Mostly no. Points and prepaid interest and property tax generally are, in the year paid; the lender, title and escrow fees are not, though some are added to your cost basis and matter when you sell.
Is there still a first-time home buyer tax credit?
The federal credit from 2008 to 2010 is gone. State and local programs exist and differ everywhere, and some issue a mortgage credit certificate that works like a credit.
Do you pay tax when you sell your house?
Only on gain above the exclusion, if you meet the ownership and use test. Many owners of a primary residence owe nothing at all.