Homeowner Tax Deductions Can Add Up for Itemizers
Homeowner tax deductions can really lower your tax bill, depending on your situation. Let’s take a look at what’s deductible, and a quick look at what isn’t.
First, a caveat: Most of these deductions are useable only if you itemize. If your itemized deductions add up to less than the standard deduction (most recently $15,750 for single filers and $31,000 for married filing jointly), obviously you’re better off taking the standard deduction.
Mortgage Interest
Homeowners can take a deduction on the interest of up to $375,000 in mortgage debt ($750,000 if you’re married filing jointly). What’s more, the fees you pay when you first take out your mortgage to secure a lower interest rate (commonly known as “points”), are deductible, too, over the life of the loan.
When a mortgage is new, generally a much large portion of your mortgage payment goes toward paying the interest, rather than the principle. That means the odds you’ll be able to take advantage of the homeowner tax deductions for mortgage interest can go down.
Real Estate Taxes
State and local real estate taxes are deductible, subject to caps. The limit is $40,000 for a married couple or single filer, and drops to $20,000 for married couples filing separately.
Medically Necessary Home Improvements
If you make modifications to your home for medical reasons, you can deduct the costs as a medical expense. This includes items like installing entrance ramps, widening doorways, or adding support bars. You can only deduct the amount that exceeds 7.5 percent of your Adjusted Gross Income.
Note that you can’t deduct normal maintenance, such as repairing stairs or wiring.
Not Deductible
Major changes or renovations to your home – things like adding a bathroom, replacing a roof, adding landscaping – are not deductible. At least, you can’t deduct them right away. But such improvements add to the basis of your home. The basis is considered the total amount you paid for your home. When you sell your house, the government will measure capital gains tax against the sales price minus the total basis (rather than the purchase price when you bought the home).
Other non-deductible expenses include:
- Homeowners insurance and fire insurance premiums.
- Homeowners’ Association (HOA) or condo fees.
- General home repairs, maintenance, and utility bills.
- Principal payments on your mortgage.
There are some expenses, such as some ways of making your home more energy efficient, that no longer offer tax advantages. Be sure to consult with your accountant to keep up with the latest in homeowner tax deductions.
Links
If you’re renting out a home you own, check out our blog post Tax Deductions for Landlords.
If you have made energy-efficient home improvements prior to 2026, here’s an article from the IRS dealing with available credits.
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