Tax Benefits of Buying a House in December

Bethany White December 2, 2021 | 5 min read
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The weather’s getting colder, the days are getting shorter, and the holiday season is in full swing. While there are plenty of reasons to get in the spirit, it may surprise you that buying a house is one of them. From taxes to less competitive markets, there are a lot of benefits to buying a house in December. Ready to get this sleigh ride started?

Tax benefits of buying a house in December

Taxes get a bad rap for being complicated, but they also offer plenty of perks for homeowners that are worth getting to know. You can enjoy these write-offs any season, but a winter purchase can help you maximize that potential.

In a nutshell, even if you close as late as December 31, that still qualifies you for homeowner-related deductions for that tax year. You may be eligible for more, but these are our top three tax benefits of buying a house in December:

1. Mortgage interest

This write-off applies to the interest paid on the first $750,000 of your home loan. The amount you can deduct depends on your loan amount and the date your mortgage started. You can find the full IRS explanation of how it works here.

2. Discount points

Points are pre-paid interest on your mortgage. When you take out your home loan, you’ll have the option to purchase these points to get a lower interest rate. One point equals one percent of your mortgage, and these points can be written off as itemized deductions when you file your taxes.

3. Property taxes

As a homeowner, you’ll pay state and local property taxes. If you file jointly with a spouse, you can deduct up to $10,000 in property taxes. If you file as an individual, you can deduct up to $5,000.

Market benefits of buying a house in December

Like the hectic frenzy of Black Friday shopping? We don’t either. Buying a house in December means you’ll avoid the more competitive purchasing seasons in spring and summer. Sellers will have fewer offers and will be more motivated to accept yours at a lower purchase price than they might in the busier months.

Oh, and it’s not just the housing market that works to your advantage in December. It’s slow season for moving companies and real estate agents, too, so you may be able to get settled into your new home for lower costs all around.

Personal benefits of buying a house in December

Wouldn’t it be nice to head into the year with all the paperwork and processes that go into buying your home already behind you? Plus, your new home might offer just what you need to reach your goals in the new year, whether you’re looking for more space for a home gym, a dedicated home office to launch your business, or the consistent budgeting that a mortgage offers to grow your finances.

Because your lender will likely have fewer loans on their plate in the winter, you can also usually expect to get through the mortgage process and close on your home faster than you would in busier seasons. That’s less time waiting on paperwork, and more time to do, well, anything else.

Are there any disadvantages to buying a house in December?

December is a great time to buy a home if you want to avoid the competition, but you should also consider why there’s less competition to begin with.

Bad weather

Depending on where you live, the winter weather might not be conducive to house shopping. After all, it’s hard to see the potential of a house when it’s covered in snow and ice. Appraisers might have a harder time assessing the house’s value, and winter road conditions could throw a wrench in the logistics of heading out to view potential homes.

Less time to enjoy the holidays

During the holidays, a lot of us are traveling to see family, using that PTO we’ve been accruing, and generally taking time to slow down and enjoy all the unique traditions the season brings. Between home viewings and your loan application, buying a house could take time away from those holiday plans.

Fewer options

Some sellers may wait until the busier seasons to put their house on the market, so you’ll likely find fewer options available while you’re house shopping during the winter.

I’m sold! How do I start the home buying process?

Way to take advantage of the tax benefits of buying a house in December! When you’re ready to start the purchase process, you’ll want to get in touch with a lender (or lenders) for a rate quote. Once you have an idea of how much home you can afford, it’s time for the exciting part—house shopping! Bundle up and have fun out there.

This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before making the decision to buy or refinance a home.

Buying a house in December has its perks—even if you close as late as December 31, you still qualify for homeowner-related deductions for that tax year. Plus, you’ll have less competition when you house shop in the winter.

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About the Author
When Bethany was a kid, her mom took her to the zoo, museums, and more fun spots—then made her write essays about them. Now, Bethany deploys those skills as a copywriter at Cardinal Financial and has to admit: she owes her mom one. When Bethany’s not dreaming up fresh takes on mortgage lending, you can find her running, spoiling her cat, and refusing to improve as a chef.