Key Takeaways
- Refinance costs are not all tax deductible, but some may qualify depending on how the loan is structured
- Interest and property taxes may be deductible if you meet IRS rules
- Points can sometimes be deducted over the life of the loan
- Non-deductible refinance costs include appraisals, credit reports, and legal fees
- Keep all paperwork from your loan to help with tax filing
- Learn how does refinance work before making any decisions
- Talk to Clear Mortgage to get a personalized refinance plan that fits your goals
Are Refinance Costs Tax Deductible in 2025
Refinancing your mortgage can be a smart way to save money, especially if you can lock in a lower rate. But as you weigh your options, one question comes up a lot—are refinance costs tax deductible in 2025? The answer is not always clear. Some costs may qualify for tax deductions, while others do not.
Knowing what you can and cannot deduct helps you plan better and avoid surprises at tax time. And when you work with local experts like Clear Mortgage, you get help that goes beyond the loan itself.
Which Refinance Costs Might Be Deductible?
Not all refinance costs are treated the same. Some expenses can reduce your tax bill, while others are considered standard closing fees.
Here are the most common items to look at:
- Mortgage interest may be tax deductible if your loan meets current IRS rules
- Points paid to reduce your interest rate might be deductible over the life of your loan
- Property taxes paid during closing are usually deductible
However, many closing fees are not deductible. This includes charges like title insurance, appraisal fees, credit report fees, legal costs, and home inspection fees. These are considered part of the cost of getting the new loan, not part of your yearly tax burden.
What the IRS Says About Refinance Costs
According to IRS guidelines for 2025, some refinance costs may be tax deductible if they meet specific conditions. One common example is mortgage points. If you paid points to lower your interest rate, you generally cannot deduct the full cost in the year you paid them. Instead, you spread the deduction evenly over the life of the loan.
If you used part of your refinance funds to make home improvements, the interest on that portion may also be deductible. This applies to projects like a new roof, kitchen remodel, or energy upgrades.
Other refinance costs—like title insurance, appraisals, or legal fees—are not deductible. These are considered closing costs and are not treated as direct loan expenses under the tax code.
For 2025, the standard deduction has increased to $15,000 for single filers and $30,000 for married couples filing jointly. If you plan to itemize, be sure to consider how your refinance fits within your broader tax picture. The top marginal rate remains at 37%, with various income thresholds adjusted for inflation.
Still unsure how this applies to you? That’s where Clear Mortgage comes in. While we do not give tax advice, we can help you organize your refinance paperwork so your CPA has everything needed to file correctly.
Track These Refinance Costs for Tax Time
To make the most of your refinance, be sure to keep all your records in one place. You will want to save:
- Your Closing Disclosure
- Form 1098 from your lender
- A list of any points paid
- Proof of home improvements if you’re deducting interest from that portion
Understanding how does refinance work also means knowing what documents to keep and how to stay organized. Having this information ready can make tax season much easier.
Still Wondering How Does Refinance Work?
If you are considering a refinance this year, it helps to know all your options. Knowing the full picture of refinance costs gives you better control over your budget and long-term goals. Our team at Clear Mortgage takes time to walk you through the process step by step, from application to closing.
We also help you explore the most cost-effective route, whether it’s a rate-and-term refinance or tapping into home equity. With the right guidance, you can feel confident in your next move.
Adriana Bates works with her clients during the loan process as a confidant, educator, and adviser. Adriana not only identifies their financial situation but also strives to understand her client’s priorities during this process.
She believes in the value of making educated decisions and wants to provide her clients with enough knowledge so they are empowered to do so. Adriana also serves to advise them throughout the process on what to expect from Clear Mortgage LLC LLC, and what their role entails, in order to make the process as smooth as possible.
Adriana is involved in the initial education/consultation, discussing her client’s options, talking with them during the process, and then ensuring everyone gets to the closing table.
