Whether you’re settling into your first place, or upgrading to somewhere new, buying a new home is a big moment in life. Most likely, upon finalizing the purchase of your new property, you paid some form of “closing costs” or “Settlement fees” in addition to the price of the home. Generally, the seller and you split the costs as per your sales agreement.

Unfortunately, the IRS only allows one type of closing costs to qualify for a deduction at tax time. The year you purchased the home, you are able to deduct any mortgage interest and real estate taxes when you file that year’s tax return.

The amount that you paid in points and mortgage interest will be listed on a 1098 statement that you receive from your lender. With this document you are able to deduct the costs, provided you itemize your expenses and file the return for the year in which you purchased the home.