When buying a home, key taxes and fees include closing costs (2-5% of the purchase price), property taxes (varies by state and local rates), and mortgage interest (deductible up to $10,000 under the SALT limit). Sellers face capital gains tax on profits exceeding $250,000 ($500,000 for married couples), but primary residences qualify for exclusion. Transfer taxes (0.5-2%) and real estate agent commissions (2-6%) are also common.

The U.S. tax code allows homeowners to deduct mortgage interest and property taxes up to $10,000 annually under the SALT (State and Local Tax) deduction cap, set by the 2017 Tax Cuts and Jobs Act. For 2023, the IRS limits deductions for single filers to $10,000 and married couples filing jointly to $10,000. Primary residences sold after owning the property for at least two years qualify for capital gains exclusion of up to $250,000 ($500,000 for couples), as per IRS Publication 523. Closing costs average $5,000-$15,000 (2-5% of the sale price), per the National Association of Realtors (NAR). Transfer taxes vary by county, with an average of 1% in urban areas, according to the American Land Title Association. Sellers may also owe depreciation recapture tax (25%) if they claimed tax breaks for home improvements. Capital gains rates range from 0% to 20%, depending on income. Avoiding these fees requires strategic timing, such as deducting property taxes before year-end or excluding gains via the primary residence rule. Data from the IRS and NAR underscores the importance of understanding these costs to optimize financial outcomes during real estate transactions.