Your First Tax Return After Buying a Florida Home: Form 1098, Points, Closing Costs and the Homestead Deadline

Filing taxes after buying a house feels different the first time, because a stack of new paperwork shows up at once. You get a Form 1098 from your lender, a closing statement full of line items, and a property tax bill you may not expect for months. This guide walks Florida buyers through what to keep, what may lower your federal tax, what simply goes into your cost basis, and the homestead deadline that new owners in Palm Beach and St. Lucie counties often miss.

Key takeaways

• Keep your final closing statement, your Form 1098, your deed and your first property tax bill. Together they answer almost every question your tax preparer will ask.
• Mortgage interest is deductible on up to $750,000 of loan debt for loans taken out after December 15, 2017, but only if you itemize.
• For tax year 2026 the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly, so many buyers will not itemize at all.
• Title insurance, recording fees and transfer taxes are not deductible. Instead, they are added to your cost basis, which can cut your tax when you sell.
• Florida's homestead exemption is based on January 1 status, and the application is due by March 1. Missing it can cost you for a full year.

Taxes after buying a house: start with your closing documents

Before you think about deductions, gather the papers. Most of the numbers you need come from the closing, and they are easy to lose once the moving boxes arrive.

Here is the short list to save in one folder, paper or digital:

• Final closing statement. This is the Closing Disclosure or settlement statement signed at closing. It shows points, prorated property taxes, title charges and every fee.
• Form 1098. Your lender sends it early in the year after you buy. It reports mortgage interest and, in many cases, points paid at closing.
• Recorded deed. It proves the date you took title, which matters for both tax proration and homestead.
• Owner's title policy. You will want this later for basis and for any title questions.
• Receipts for improvements. New roofs, impact windows and additions add to basis. Routine repairs do not.

Also keep a copy of your loan estimate and any rate lock agreement. They help explain why points were paid, which can matter for the deduction rules below.

Form 1098 and mortgage interest on your taxes after buying a house

The Form 1098 is the anchor for most taxes after buying a house. According to IRS Publication 936, the form should show the total interest you paid during the year, plus any deductible points and mortgage insurance premiums. Lenders send it when you pay $600 or more in interest.

For loans taken out after December 15, 2017, you can deduct interest on the first $750,000 of mortgage debt, or $375,000 if married filing separately. Most Palm Beach County purchase loans fall under that limit. However, a large loan on a waterfront home may not.

One timing detail trips up first-year owners. If you closed in, say, September, your first 1098 covers only a few months of payments. Also, the interest you prepaid at closing for the rest of that month appears on your closing statement and is often included on the 1098 as well. Check that the two match before you file.

Should you itemize in your first year?

The interest deduction only helps if you itemize. For tax year 2026, the IRS set the standard deduction at $16,100 for single filers and $32,200 for married couples filing jointly.

So add up mortgage interest, deductible points, your share of property taxes and charitable gifts. If the total beats your standard deduction, itemizing may make sense. If not, you take the standard deduction, and the closing papers mostly matter for basis instead. Many buyers who close late in the year end up in the second group.

Points: deduct now or spread them out

Points are fees you pay the lender to get a lower rate. Under IRS Publication 936, you can deduct them in full in the year paid only if you meet every one of nine tests. Among them, the loan must be secured by your main home, it must be used to buy or build that home, and the points must be clearly shown on the settlement statement. Paying points must also be a normal practice in your area, at a normal amount.

If you miss a test, the points are not lost. Instead, you deduct them a little at a time over the life of the loan. Points on a refinance usually follow that slower path too.

Seller-paid points work in a specific way. The IRS lets you treat them as if you paid them. Then, under IRS Publication 530, you must reduce your home's basis by the same amount. Your preparer will want to see the line on the closing statement that shows who paid.

Property taxes after buying a house in Florida

Florida property taxes are paid in arrears. The bill for a calendar year goes out in November, and the seller usually credits you at closing for their share of the year. As a result, you may pay the full bill even though you only owned the home for part of the year.

Even so, Publication 530 says you can deduct only your own share. The buyer is treated as paying the taxes starting on the date of sale. The IRS gives a simple example: a buyer who closes September 1 owns the home for 122 days of the year, so they deduct 122/365 of the annual bill.

Next, watch the cap on state and local taxes. NAHB's summary of the 2025 tax law notes the SALT cap rose from $10,000 to $40,000 for 2025 through 2029. It phases down for households above $500,000 of income but will not fall below $10,000. Because Florida has no state income tax, property tax is often the main item under that cap.

For a deeper look at how the county bill is built, see our guide to how property taxes work in Florida.

Paying early through escrow or on your own

Florida rewards early payment. Under section 197.162 of the Florida Statutes, the discount is 4% in November, 3% in December, 2% in January and 1% in February. If you have an escrow account, your servicer normally pays in November to take the largest discount. If you pay yourself, mark the calendar.

Either way, the deduction counts in the year the tax is actually paid. So a bill paid in December falls in that tax year, while one paid in January falls in the next.

Closing costs: deductible, basis, or neither

Most closing costs do not reduce your taxes this year. Still, many of them help later. Publication 530 sorts them into three groups.

• Possibly deductible now: qualified mortgage interest, qualifying points and your share of real estate taxes.
• Added to basis: abstract fees, legal fees, recording fees, surveys, transfer or stamp taxes, and owner's title insurance.
• Neither: homeowners insurance premiums, utility charges before closing, and costs tied to getting the loan, such as appraisal fees and loan assumption fees.

In Florida, the seller usually pays the documentary stamp tax on the deed, while the buyer usually pays the stamp tax and intangible tax on a new mortgage. Check your statement, since contracts can shift these costs.

Why basis matters when you sell

Basis is roughly what you paid for the home plus qualifying costs and improvements. A higher basis means a smaller taxable gain when you sell. That is why a recording fee you cannot deduct today is still worth tracking. Add improvements over the years, and the total can add up.

PMI and homeowners insurance on your first return

Private mortgage insurance has a changing history. Publication 936 for 2025 says the itemized deduction for mortgage insurance premiums has expired. Then the 2025 tax law brought it back. According to NAHB's summary, the ability to deduct PMI premiums returns starting with tax year 2026. Income limits apply, so ask your preparer whether you qualify.

Homeowners insurance is a different story. On a home you live in, the premium is not deductible, even when it runs through escrow. In Florida that can be one of the largest parts of your payment, but it does not help your tax return.

If you put less than 20% down, you can also plan to remove PMI later. Our post on private mortgage insurance in Florida covers when that happens.

The homestead deadline that shapes taxes after buying a house

This is the step with the biggest local impact on taxes after buying a house. Florida's homestead exemption can cut the taxable value of your home by up to $50,000 and caps future increases in assessed value. However, you must apply.

The Palm Beach County Property Appraiser says applicants must be eligible as of January 1 and must file by March 1 of the year the benefit applies. The rule comes from section 196.011 of the Florida Statutes, so the same March 1 deadline applies in St. Lucie County.

In practice, timing works like this. If you close in October 2026 and move in right away, you own and live in the home on January 1, 2027. So you file by March 1, 2027, and the exemption shows on your 2027 tax bill. Your 2026 bill reflects the prior owner's status for that year.

What to bring when you file

Palm Beach County accepts applications online, by mail or in person. The Property Appraiser asks for Social Security numbers for all applying owners and spouses, a Florida driver's license, and proof of residency such as a Florida voter registration that matches the home address. Buyers in Port St. Lucie file with the St. Lucie County Property Appraiser. If you are new to the area, our Port St. Lucie area guide covers what life there looks like.

Also, the homestead cap limits yearly increases in assessed value to 3% or the change in the Consumer Price Index, whichever is lower. Over time, that can create a large gap between market value and taxed value, which you may later be able to carry to another Florida home.

A first-year checklist for taxes after buying a house

1. Save your closing statement, deed and title policy the week you close.
2. Mark March 1 on your calendar and file for homestead once you qualify on January 1.
3. Watch for your Form 1098 in late January and compare it with your closing statement.
4. Find the prorated property tax line and figure out your share for the year.
5. Compare itemized deductions with the standard deduction before you choose.
6. Start a basis file for improvements, with receipts and permits.
7. Check your November tax bill and confirm your escrow paid it on time.

Frequently asked questions

Can I deduct closing costs on my taxes after buying a house?

Only a few. Qualified points, mortgage interest and your share of property taxes may be deductible if you itemize. Most other costs, like title insurance and recording fees, are added to your basis instead.

Is homeowners insurance tax deductible in Florida?

Not on a home you live in. The premium is a personal expense, even when it is paid through escrow.

When is the homestead deadline in Palm Beach County?

You must qualify as of January 1, and the application is due by March 1 of the year the exemption applies. The same statewide deadline applies in St. Lucie County.

Why is my Form 1098 interest lower than I expected?

Your first 1098 covers only the months after closing. In addition, interest prepaid at closing may or may not appear on the form, so check it against your closing statement.

Do I report buying a house on my taxes?

No. Buying a home is not a taxable event. The purchase only shows up through deductions you choose to claim and, later, through your basis when you sell.

Sources

• IRS Publication 530, Tax Information for Homeowners
• IRS Publication 936, Home Mortgage Interest Deduction
• IRS, tax year 2026 inflation adjustments
• NAHB, tax season updates under the 2025 tax law
• Palm Beach County Property Appraiser, homestead exemption
• Florida Statutes, s. 196.011
• Florida Statutes, s. 197.162

This article is general information, not legal, tax or financial advice. Tax rules change often, so talk with a CPA or tax professional about your own return.

Thinking about your next move? If you own a home in Palm Beach County or Port St. Lucie and want to know what it would sell for, our agents can prepare a pricing plan. Buying instead? Book a buyer strategy call and we will walk you through costs, taxes and timing before you write an offer. Contact Pure Equity.