Why Do So Many Real Estate Deals Get Done in December?

Every year, real estate attorneys, agents, and title companies see the same pattern: December is one of the busiest months for closings. Even in a slower market, deals surge between Thanksgiving and New Year’s.

While personal timelines, relocation plans, and year-end goals all play a role, the real driver is taxes. December offers unique financial advantages that both buyers and sellers want to take advantage of before the calendar resets.

Below is a breakdown of why so many buyers and sellers push to close before December 31.

1. Buyers Want to Capture Mortgage Interest and Property Tax Deductions

For many homeowners, buying before year-end means instant tax benefits, including:

✔ Mortgage Interest Deduction

Even if a buyer only makes one mortgage payment in December, they can often deduct:

• Mortgage interest paid in 2025

• Points paid at closing (in many cases)

This can be thousands — sometimes tens of thousands — in deductions.

✔ Property Tax Deduction

If the buyer pays their initial property tax installment at closing, they may also be entitled to deduct those taxes for that year.

For high-earning buyers in NJ, these deductions matter — especially in a year where income was unusually high.

2. Sellers Want to Recognize Capital Gains in the Current Year — Or Push Them to the Next

Depending on a seller’s financial situation, closing in December may allow them to:

✔ Recognize capital gains in a lower-income year

If 2025 income was lower than what they expect in 2026, taking the capital gain this year can result in a lower tax bill.

✔ Offset the gain with current-year losses

If the seller had:

• investment losses

• business losses

• carry-forward losses

They may want the sale to close before year-end to offset their gain.

3. Investors Want to Capture Depreciation and Tax Benefits Immediately

Real estate investors have multiple December incentives, such as:

• Accelerated depreciation schedules

• Cost segregation benefits

• Bonus depreciation (if applicable for the year)

• Closing before year-end to start the depreciation clock

If an investor closes on December 31, they still receive a full year of depreciation benefits for the year of purchase.

This is why December is huge for:

• Multi-family purchases

• Mixed-use properties

• Commercial real estate deposits and closings

4. 1031 Exchange Deadlines Push Deals Into December

A large percentage of investment deals close in December due to 1031 exchange timing:

• Investors who sold earlier in the year must close their replacement property within 180 days.

• Many who sold in the summer or fall find their deadline landing in late December.

Failing to close means losing the tax deferral — so December becomes crunch time.

5. Buyers Want to Lock In Current Rates Before January Uncertainty

Even though interest rates fluctuate all year, many lenders:

• tighten underwriting after the new year

• adjust programs January 1

• require re-approval if closing goes into the next year

Buyers want the certainty of this year’s rate, terms, and approval.

6. Sellers Looking to Reduce Carrying Costs

Closing before December 31 lets sellers avoid:

• an extra quarter of property taxes

• another month of HOA dues

• another month of mortgage payments

• another month of liability, utilities, and insurance

This is especially true for:

• estate sales

• vacant homes

• investors looking to unload a property

7. Everyone Wants a Clean Tax Year for Records

A December closing:

• simplifies tax filing

• makes accounting cleaner

• eliminates prorations crossing over multiple tax years

This is especially important for:

• complex estates

• trusts

• LLCs

• multi-owner properties

A clean year-end transaction avoids a lot of headaches..

How Gotlib Law Helps Clients Take Maximum Advantage of Year-End Tax Deals

As a New Jersey real estate attorney and former broker, my firm ensures that December deals close cleanly and quickly, including:

• Fast, detailed contract review

• Clear tax timing explanations for buyers and sellers

• Coordination with lenders, agents, and title to meet year-end deadlines

• Ensuring proper prorations, escrow adjustments, and tax allocations

• Protecting clients from rushing into a legally risky or incomplete deal

If you or your clients are considering buying or selling before year-end, timing matters — and the right legal guidance can help you take full advantage of these benefits.

For questions please reach out directly via our 'Contact Us' form.