Don’t Miss These Top 5 Tax Breaks for Homeowners
Owning a home is often seen as a cornerstone of the American dream. Beyond the pride and security that come with homeownership, there are financial perks that can help maximize your savings—especially during tax season. With the right knowledge, you can claim deductions that not only reduce your taxable income but also increase your tax refund.
In this blog, we’ll explore the top tax breaks available to homeowners, helping you make the most of your investment. Whether you’re deducting mortgage interest or leveraging home improvement credits, these tips can have a positive impact on your financial well-being.
1. Mortgage Interest Deduction
One of the biggest advantages of homeownership is the ability to deduct mortgage interest. If you’ve taken out a mortgage to buy, build, or improve your home, you can typically deduct the interest paid on loans up to:
$1 million if the mortgage originated before December 16, 2017.
$750,000 if the mortgage originated after that date.
Your mortgage servicer will send you IRS Form 1098, detailing the interest paid over the year. Be sure to include this when filing your taxes to claim your deduction.
2. Points Deduction
If you purchased points to reduce your mortgage interest rate or refinanced your mortgage, you might qualify for additional deductions.
Points paid upfront to buy down your interest rate can often be deducted in the same year.
Points on refinanced mortgages are deductible over the life of the loan.
Keep in mind that points used to pay non-deductible fees, like property taxes, do not qualify. Be sure to review your closing disclosure for itemized details.
3. Property Taxes
As a homeowner, you can deduct up to $10,000 in property taxes annually ($5,000 if married filing separately). If your taxes are paid through an escrow account, the amount will appear on your escrow statement. However, this deduction excludes transfer taxes, HOA fees, and any unpaid property taxes.
4. Home Improvement Tax Benefits
While the interest on most home improvement loans is no longer deductible, certain improvements may still qualify for tax benefits:
Medical Accessibility Improvements: Renovations like wheelchair ramps or bathroom modifications for medical needs may be deductible as medical expenses.
Energy-Efficient Upgrades: Solar energy systems and other energy-efficient home improvements can qualify for a federal tax credit of up to $3,200 annually. This credit equals 30% of qualified expenses, including energy-efficient doors, windows, and audits, through 2032.
5. Home Equity Loan Interest
If you’ve used a home equity loan or line of credit to improve your home, the interest paid may be deductible. For tax years 2018–2025, only funds used to buy, build, or improve the property qualify. Any funds used for personal expenses, like paying off credit cards, are not deductible.
Maximize Your Homeownership Tax Benefits
Owning a home provides more than a place to live—it’s an opportunity to build wealth and enjoy tax advantages. By understanding these deductions, you can reduce your tax burden and make the most of your investment.
Keep in mind that tax laws are subject to change. Consulting a tax professional or financial advisor is the best way to ensure you’re taking full advantage of the benefits available to you while avoiding potential pitfalls.
At Texas Lending Partners, we’re here to guide you every step of the way—from securing the best loan to making informed financial decisions. While we’re not tax professionals, we can connect you with resources to help you succeed as a homeowner.
Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered tax, legal, or financial advice. Always consult with a tax professional for advice specific to your situation.
