If you are buying your first home in California, it is very natural to wonder if that big life step comes with a bigger tax refund. Unfortunately, there is no automatic California first-time homebuyer tax credit in 2025. Yet, some tax benefits could still apply—in accordance with the income, loan interest, and property-related deductions.
First-Time Homebuyer Tax Refund
We present a list below of what first-time buyers should know:
- No Extra Refund by Default: The IRS does not issue a larger refund just because you are a first-time homebuyer. The refund depends on the withholdings and deductions as well as credits—not your buyer status.
- Mortgage Interest Deduction: If the deductions are itemized, you may be able to deduct mortgage interest. This can have a reducing impact on the taxable income. It potentially results in a higher refund.
- Property Tax Deduction: California homeowners are also able to deduct eligible property taxes. Again, this only applies if you choose to itemize rather than take the standard deduction.
- Energy Credits for Home Upgrades: If the new home has qualified energy-efficient improvements, claiming federal energy tax credits is possible. These are unrelated to being a first-time buyer but are worth exploring.
Alternatives
It is correct that there is no dedicated first-time homebuyer tax break California offers in 2025. Fortunately, housing support still exists through alternative channels:
- The CalHFA MyHome Assistance Program presents deferred loans to cover down payments or closing costs.
- The now-paused California Dream For All 2025 initiative was a shared appreciation loan that lent a helping hand to new buyers entering the market.
- A closing cost grant California buyers may explore is the Pathway to Home program. It offers up to $10,000 in support.
It should be noted that the mentioned programs do not increase the tax refund—but they do lower the upfront cash needed to buy a home. It is indeed a financial benefit in itself.
Need Assistance?
If you need any assistance, Dimov Tax is ready to present professional support in evaluating all available options. Contact us today as a first step to financial clarity.