Tax Benefits of Closing Before April: Why March is a Smart Time to Buy a Home
Timing plays a crucial role in real estate, and for home buyers in the Long Beach Island (LBI) region, closing on a home before April can offer valuable tax benefits. If you’re considering purchasing a home, understanding how timing affects your tax deductions can help you make a more financially savvy decision. The tax benefits of buying a home before April can provide a financial incentive to act quickly, especially in March, when many homebuyers are focused on closing deals before the tax year ends.
Closing before the tax year ends can lead to substantial savings, thanks to deductions on property taxes, mortgage interest, and more. Let’s explore why closing in March can be a strategic move for home buyers.
1. Maximize Property Tax Deductions by Closing Before April
One of the most significant tax advantages of homeownership is the ability to deduct property taxes on your federal income tax return. When you close before April, you may be able to deduct a portion of the property taxes paid for that tax year.
According to the IRS, homeowners can deduct up to $10,000 ($5,000 if married filing separately) in state and local taxes, including property taxes (IRS, 2023). While New Jersey property taxes are among the highest in the nation, this deduction can provide meaningful savings.
💡 Tip: Keep detailed records of any property taxes paid at closing. Your lender or title company should provide this information on your closing statement.
2. Benefits From Mortgage Interest Deductions by Closing Early
Another significant tax perk of buying a home is the ability to deduct mortgage interest. If you secure a mortgage and close on your home before April, the interest paid in those first months could be deductible when you file your taxes the following year.
Per IRS guidelines, you can deduct interest on mortgages up to $750,000 ($375,000 for married couples filing separately) (IRS, 2023). This deduction can lower your taxable income, reducing what you owe to the government.
💡 Tip: Your lender will provide Form 1098 at the end of the year, detailing the mortgage interest you’ve paid. Be sure to include this form when filing your taxes.
3. Deduct Closing Costs and Points to Maximize Tax Savings
If you choose to buy down your mortgage rate by purchasing discount points, you may be able to deduct those costs in the year you close. Points, also known as prepaid interest, are considered part of your mortgage interest deduction.
Additionally, some closing costs may be deductible, such as prepaid interest or mortgage insurance premiums (National Association of Realtors, 2023).
💡 Tip: Work with your accountant or tax professional to maximize your deductions and ensure you’re following IRS guidelines.
4. Plan for Long-Term Tax Benefits of Homeownership
Beyond immediate tax benefits, closing in March allows you to start building equity sooner. Real estate historically appreciates over time, so securing a home early in the year gives you a financial head start.
Additionally, homeownership can open the door to future deductions on energy-efficient upgrades, home office expenses, and renovations that add value to your property.
This is why many buyers choose tax benefits of buying a home before April as a key motivator when making their decision. Acting quickly can help you secure financial savings while making a sound long-term investment.
Why Now is the Time to Buy in the LBI Region
The LBI Region real estate market remains highly desirable, with homes offering stunning waterfront views, strong rental potential, and a vibrant community. Whether you’re looking for a vacation home or a year-round residence, buying now could set you up for long-term financial success.
If you’re ready to take the next step, our team at The Van Dyk Group is here to help. Contact us today to explore available listings and and take advantage of the tax benefits of buying a home before April.
References
- Internal Revenue Service (IRS). Topic No. 503 Deductible Taxes. www.irs.gov
- National Association of Realtors (NAR). Homeownership Tax Benefits. www.nar.realtor
Last Updated on March 19, 2025
