Tax Deductions for Homeowners: What You Can Claim

Owning a home is not just a place to live—it’s also a way to save on your taxes! Homeowners have access to a variety of deductions that can reduce their tax burden. Whether you’re a first-time buyer or a seasoned homeowner, here’s a breakdown of the key tax deductions you may be able to claim.

1. Mortgage Interest

One of the most significant tax benefits of owning a home is the ability to deduct mortgage interest. If you have a mortgage on your primary residence (or a second home), you can deduct the interest paid on loans up to $750,000 (or $1 million if the loan was taken out before December 15, 2017).

Pro Tip: You’ll need to itemize your deductions to claim this, so make sure the total of all your deductions exceeds the standard deduction.

2. Property Taxes

Homeowners can deduct up to $10,000 in state and local taxes, which includes property taxes. This cap applies to both single and married filers.

3. Points Paid on a Mortgage

If you paid points to secure a lower interest rate when you took out your mortgage, these costs might be deductible. Typically, you can deduct them in the year they were paid if the loan was for your primary residence.

4. Home Office Deduction

Do you work from home? You may be eligible for a home office deduction if you use part of your home exclusively for business purposes.

 Key Note: This deduction is only available to self-employed individuals, freelancers, and small business owners—not W-2 employees.

5. Energy-Efficient Home Improvements

Homeowners making their homes more energy-efficient can benefit from tax credits for installing:

• Solar panels
• Energy-efficient windows or doors
• Insulation
• Heating and cooling systems

The Inflation Reduction Act has expanded these credits, so check if your upgrades qualify!

6. Home Equity Loan Interest

If you took out a home equity loan or line of credit and used the funds to improve your home, the interest might be deductible. This doesn’t apply if the loan was used for personal expenses like paying off credit card debt.

7. Private Mortgage Insurance (PMI)

If you’re paying private mortgage insurance because your down payment was less than 20%, you might be able to deduct those premiums. However, this deduction is subject to income limits and may phase out for higher earners.

8. Casualty and Theft Losses

If your home is damaged due to a federally declared disaster, you may be able to deduct unreimbursed repair costs. This doesn’t cover everyday wear and tear or damages not linked to a disaster.

9. Medical Home Improvements

If you’ve made improvements to your home for medical reasons (e.g., wheelchair ramps, wider doorways), those costs may be deductible as a medical expense if they exceed a certain percentage of your adjusted gross income.

Understanding and claiming these tax deductions can save homeowners a significant amount of money. Keep detailed records of your expenses and consult a tax professional to ensure you’re maximizing your deductions.