Most Las Vegas buyers and sellers leave real money on the table at tax time. Federal tax law offers deductions on mortgage interest, property taxes, and selling costs, yet the IRS reports that millions of homeowners either miss these entirely or claim items that don’t qualify. Nevada’s zero-income-tax advantage makes federal deductions even more valuable here than in most states, since there’s no state return competing for itemized benefit. This guide walks through every major deduction available to buyers and sellers in 2026, what the IRS actually allows, what it doesn’t, and how to document everything so your accountant has exactly what they need.
Key Takeaways
- The mortgage interest deduction applies to loan balances up to $750,000 for loans originated after December 15, 2017 (IRS Publication 936).
- State and local tax (SALT) deductions, including property taxes, are capped at $10,000 per year under current law.
- Married couples filing jointly can exclude up to $500,000 in capital gains from a home sale under Section 121 (IRS Publication 523).
- Nevada has no state income tax, so federal deductions carry the full weight of your tax savings (Tax Foundation).
- HOA fees, title insurance, appraisal costs, and homeowners insurance premiums are NOT deductible for primary residences.
What Tax Deductions Are Actually Available to Home Buyers?
Buyers in 2026 can deduct mortgage interest, mortgage points (prepaid interest), and their share of property taxes paid at closing, according to IRS Publication 936. These three categories together can reduce taxable income by thousands in the first year. Importantly, all three require you to itemize deductions rather than take the standard deduction, which was $14,600 for single filers in 2024.
For most Las Vegas buyers, the math works in favor of itemizing. A typical $450,000 mortgage at 7% generates roughly $31,000 in interest in year one. That number alone clears the standard deduction threshold for most filing statuses.
For a full breakdown of what you’ll pay at closing, see our guide to closing costs in Las Vegas 2026.
Citation Capsule: According to IRS Publication 936, homeowners may deduct interest on mortgage debt up to $750,000 for loans originated after December 15, 2017. For loans originated on or before that date, the prior $1,000,000 limit still applies. This deduction is available for primary and secondary residences combined.
How Does the Mortgage Interest Deduction Work in 2026?
The mortgage interest deduction remains the largest single tax benefit for homeowners. The IRS allows deductions on interest paid for acquisition debt up to $750,000, or $375,000 if married filing separately (IRS Publication 936). Your lender sends Form 1098 each January showing exactly how much interest you paid during the prior tax year.
Most early-stage mortgages are heavily front-loaded with interest. On a 30-year loan at 7%, nearly 82% of your first-year payments go toward interest. That front-loading makes the deduction especially valuable in the years immediately after purchase.
In Las Vegas transactions processed through 2025, we consistently saw buyers with loan amounts near the $750,000 cap saving between $4,000 and $8,000 in federal taxes in year one, depending on their marginal rate. The deduction shrinks over time as the loan amortizes, but it remains significant for the first decade.
A few practical rules to keep in mind. First, the debt must be “acquisition indebtedness,” meaning the loan was used to buy, build, or substantially improve your home. A cash-out refinance that pays off credit cards, for example, does not convert consumer debt into deductible mortgage debt. Second, the deduction is only available if you itemize. If your total itemized deductions don’t exceed the standard deduction, the interest provides no marginal benefit.
See our complete breakdown of mortgage points for more on how discount points affect your rate and taxes.
Are Mortgage Points Deductible at Closing?
Mortgage points paid to reduce your interest rate are deductible in the year of purchase if they meet IRS conditions for a primary residence. One point equals 1% of the loan amount. On a $400,000 loan, one point costs $4,000 and is fully deductible the year you close, provided the purchase meets the IRS checklist (IRS Publication 936).
The deductibility rules for points have specific requirements. The home must be your primary residence. Points must be computed as a percentage of the loan balance. They must be clearly labeled on your Closing Disclosure as “points,” “loan discount,” or “discount points.” And the amount can’t exceed what’s typical for your area.
Points paid on a refinance, a second home, or a rental property follow different rules. Refinance points must typically be deducted ratably over the loan’s life, not all at once. If you refinance again or sell before that period ends, any remaining undeducted points become deductible in that year. Many homeowners miss this catch-up deduction entirely.
Your Closing Disclosure (the form you sign at settlement) is the document that proves points were paid. Keep it with your tax records permanently, not just for the current year.
Use our closing cost calculator to estimate your points and other upfront expenses before you close.
What Is the Property Tax Deduction and How Does the SALT Cap Affect It?
Property taxes paid on your Las Vegas home are deductible as part of the State and Local Tax (SALT) deduction, but total SALT deductions are capped at $10,000 per year ($5,000 married filing separately) under the Tax Cuts and Jobs Act (IRS Topic 503). Since Nevada has no state income tax, the entire $10,000 cap is available for property taxes, unlike most other states where the cap must be split.
Clark County property taxes run approximately 0.65% of assessed value annually, among the lowest effective rates in major U.S. metros. On a $450,000 home, that’s roughly $2,925 per year, well under the SALT cap. Most Las Vegas homeowners won’t hit the ceiling unless they own multiple properties or have significant local tax bills.
In an analysis of Clark County parcel data through early 2026, fewer than 8% of owner-occupied primary residences had combined property tax bills that approached the $10,000 SALT limit. Most single-family homeowners pay between $2,200 and $4,500 per year, giving them substantial room under the cap.
Property taxes paid through escrow are still deductible in the year they’re disbursed to the county, not when you pay them into escrow. Your lender’s year-end escrow statement will show the disbursement date and amount.
Citation Capsule: The SALT deduction, which includes property and state income taxes, is capped at $10,000 per year for most filers under current law (IRS Topic 503). Nevada homeowners have an advantage: with no state income tax, the full $10,000 cap is available for property tax deductions, unlike residents of high-tax states who must split the cap.
For how property taxes flow through escrow at closing, see our initial escrow payment guide.
How Does the Section 121 Capital Gains Exclusion Work for Sellers?
The Section 121 exclusion lets qualifying sellers exclude up to $250,000 in profit ($500,000 married filing jointly) from capital gains tax when they sell their primary residence, according to IRS Publication 523. To qualify, you must have owned and lived in the home as your primary residence for at least two of the five years before the sale. You can only claim this exclusion once every two years.
Las Vegas home values have appreciated significantly over the past decade. The median home price in Clark County crossed $430,000 in 2024, and many long-term owners have gains well above the exclusion limits. Knowing your cost basis, including capital improvements, directly affects how much of your profit is taxable.
Your “adjusted basis” includes the original purchase price plus the cost of any capital improvements you made during ownership. New roof, kitchen remodel, added square footage: these additions raise your basis and reduce your taxable gain dollar-for-dollar. Maintenance and repairs, however, don’t count.
For a deeper look at how this plays out at sale time, see our guides on capital gains tax on home sales and the home sale tax exclusion.
What Selling Costs Can Sellers Deduct to Reduce Capital Gains?
Sellers can reduce their taxable capital gains by adding eligible selling costs to their adjusted basis, effectively lowering the profit the IRS taxes. These costs include real estate commissions, title and escrow fees, attorney fees, staging costs, advertising, and transfer taxes paid by the seller (IRS Publication 523). On a typical Las Vegas sale, these costs run 6-8% of the sale price.
Here’s how the math works. If you sell for $500,000 with a $300,000 basis and $35,000 in selling costs, your gain isn’t $200,000. It’s $165,000 ($500,000 minus $300,000 minus $35,000). If you’re a married couple under the $500,000 exclusion, that gain is entirely tax-free.
See our guide to real estate commissions for a full breakdown of what sellers typically pay at closing.
Citation Capsule: According to IRS Publication 523, selling costs that are directly connected to the sale of your home, including agent commissions, title insurance paid by the seller, legal fees, and staging, reduce the amount realized from the sale and thus lower your taxable capital gain. These costs must be documented with receipts and reflected on the closing disclosure.
What Closing Costs Are NOT Deductible?
Many common closing costs provide no tax benefit at all for primary residence buyers and sellers. Knowing this list prevents costly errors on your return. The IRS disallows deductions for homeowners insurance premiums, home appraisal fees, title insurance premiums, HOA fees paid at closing, transfer taxes, recording fees, and moving expenses (except for active-duty military relocations under orders).
The most common mistake we see is buyers trying to deduct title insurance. It’s a required closing cost, it’s expensive, and it feels like it should be deductible. But the IRS treats it as a capital cost, not an interest or tax expense. It’s added to your cost basis instead, which reduces your eventual capital gains when you sell.
Homeowners insurance follows the same logic. It protects the asset but isn’t a deductible expense for personal residences. Rental property owners operate under different rules; for them, insurance premiums are deductible as a business expense.
Learn more about HOA fees and what buyers should expect before committing to a community.
Does Nevada’s No-Income-Tax Status Change the Math?
Nevada’s zero state income tax makes federal deductions more valuable here than in most states. In California, for example, a dollar of federal deduction competes with state income tax that can run 9-13%. In Nevada, that dollar saves only federal tax, but there’s no state return eating into your benefit separately (Tax Foundation).
What this means practically: Nevada homeowners get to use the full $10,000 SALT cap for property taxes. In a state with 5% income tax, a homeowner might use $6,000 of the cap on income taxes, leaving only $4,000 for property taxes. Every Nevada homeowner keeps the whole cap for property taxes.
Nevada also has no estate tax at the state level. For long-term owners with significant appreciation, the combination of the Section 121 exclusion and Nevada’s tax environment creates one of the most favorable home-sale tax profiles in the country.
If you’re still in the planning stage, understanding your debt-to-income ratio can also affect how much mortgage interest you’ll ultimately be able to deduct.
What Documentation Do You Need to Claim These Deductions?
Good record-keeping makes the difference between a smooth tax filing and a stressful audit. For buyers, the key documents are: Form 1098 from your lender (mortgage interest), your Closing Disclosure showing points paid, and your county property tax statements. For sellers, add your original purchase closing documents, receipts for all capital improvements, and the final closing disclosure from the sale.
Keep these records permanently, not just for the tax year you claim them. The IRS can audit returns up to three years back in most cases, but six years if it suspects significant underreporting. Capital improvement receipts should be kept as long as you own the property, plus six years after you sell.
One pattern that causes problems repeatedly is sellers who made major improvements but lost the receipts. A 2018 kitchen remodel worth $40,000 can reduce taxable gain by $40,000, saving a couple in the 15% long-term capital gains bracket $6,000. Without the receipts, that deduction disappears.
Cloud storage works well for this. Photograph every contractor invoice and closing document and store them in a folder labeled with the property address. When you sell, your accountant will thank you.
Frequently Asked Questions
Can I deduct mortgage interest on a Las Vegas home if I also have a vacation home?
Yes. The $750,000 debt limit applies to the combined balance of your first and second homes, not each property separately (IRS Publication 936). If your primary mortgage is $600,000 and you have a $200,000 vacation home loan, only $750,000 of that $800,000 combined balance generates deductible interest. Interest on the remaining $50,000 is not deductible.
Is Nevada property tax deductible on my federal return?
Yes, Nevada property taxes are deductible as part of the SALT deduction on your federal return, up to the $10,000 annual cap (IRS Topic 503). Because Nevada has no state income tax, most Las Vegas homeowners can apply their entire SALT allowance to property taxes. On a typical Clark County home, property taxes run $2,200 to $4,500 per year, well under that cap.
What if I only lived in my Las Vegas home for one year before selling?
The Section 121 exclusion requires two years of primary residence in the five years before sale. If you fall short, you may qualify for a partial exclusion if the sale was due to a change in employment, health reasons, or unforeseen circumstances (IRS Publication 523). The partial exclusion is prorated: one year of two equals 50% of the full exclusion, or $125,000 single and $250,000 married. Consult a tax professional if you’re in this situation.
Are closing costs I paid as a buyer deductible?
Most buyer closing costs are not directly deductible. The deductible items are mortgage points, prepaid mortgage interest (interest paid between closing and month-end), and property taxes paid at closing. Lender fees, title insurance, appraisal fees, and HOA prepayments are not deductible for primary residences. Some of these costs do add to your cost basis, which reduces capital gains when you eventually sell.
Do I owe capital gains tax if I sell my Las Vegas home for a large profit?
Not necessarily. The Section 121 exclusion shields up to $250,000 in profit for single filers and $500,000 for married couples filing jointly from capital gains tax, provided you meet the ownership and use tests (IRS Publication 523). Gains above the exclusion are taxed at long-term capital gains rates (0%, 15%, or 20% depending on income) if you held the property for more than one year. Selling costs and capital improvements reduce your taxable gain before the exclusion is applied.
Tax rules change, and every situation is different. The deductions covered here represent current federal law as of 2026, but your specific outcome depends on your income, filing status, loan structure, and how long you’ve owned the property. Work with a CPA or enrolled agent who handles real estate transactions regularly, and bring your Closing Disclosure to every meeting. The team at Grand Prix Realty can connect you with trusted tax professionals who work specifically with Las Vegas buyers and sellers. For a full picture of what you’ll owe at closing before you ever get to tax time, start with our closing cost calculator. For more on this topic, see our hidden costs of buying a home.
