My federal return was $2,800 and state was $170 last year and $4,800 and $1,200 this year which seems like I made a mistake somewhere to be that high.

Nothing else significant changed between last year and this year besides buying a house in California. With form 1098 listing $4,670 for box 1 (mortgage interest) and $4,690 for box 6 (points paid on purchase of principle residence) as well as $3,500 on property tax.

Just wanted to double check that this type of increase on tax return is normal for owning a house? I don't want to make a mistake during filing.

  • 5
    It's unclear what you mean by "return" here. A tax return is the form you send to the IRS. Do you mean that you got a higher tax REFUND than you expected? (Reasonable, with the interest & points, and also probably a property tax deduction.) Or that you had to send the IRS more than you expected with your return?
    – jamesqf
    Mar 12, 2017 at 3:28

3 Answers 3


So you have over $12,000 in additional deductions and are surprised by a refund that's $2,000 larger? That's a 17% marginal tax rate; I'm surprised your refund wasn't higher all else being equal.

In either case your withholdings were way too high. If you expect similar activity next year (which would not include the points you paid) I would consider reducing your withholdings with your payroll department.


For many people the purchasing of a house with a mortgage takes them from the standard deduction to itemizing their deductions.

This means that the mortgage interest, and points, and property tax may move them above the standard deduction. Other items that will now be important for determining the itemized deductions include state income tax, charity, and depending on the state a personal property tax.

It is not unusual for a person to pay significantly lower taxes after buying a home with a mortgage, if there are no other changes (such as a new marriage and kids). If you didn't make any W-4 changes last year I would expect your refund to grow significantly.

Depending on when you settled on the house last year, the second year those house related deductions could be even larger. While the points paid will be zero, the interest and property tax will be for the whole 12 months.

Once you file your taxes this year you can look at this site for questions about how to adjust your W-4 to minimize your next refund and other important guidelines.


It is normal to have a big change in your return when you make big changes to your tax deductions. The deductions for mortgage interest, points paid, and property tax all reduced your tax liability, but you didn't make any changes to your withholding rates (which you could do by filing another W-4 with your employer).

Next year if there are no other changes, you should expect a smaller refund, because you will not get a deduction for points paid (unless you refinance your house and pay against points again). Each year as you pay down your mortgage, your mortgage interest deduction will also decrease.

If you do decide to submit another W-4 decreasing your withholding, you can get more back in each paycheck and a smaller refund next year. The IRS has a calculator to help you select the appropriate amount of withholding.

  • I disagree with the characterization of decreasing withholding as "getting more back in each paycheck". Nothing is gotten "back".
    – Ben Voigt
    Feb 16 at 22:52

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