Tax Deductions for Homeowners
As a homeowner, knowing the tax deductions you’re eligible for can help you save at tax time. By learning about these deductions, you can be better equipped to take full advantage of the tax benefits1 associated with homeownership.
What is a tax deduction?
A tax deduction, also called a tax write off, is a reduction in the amount of taxable income that you can claim on your tax returns. Tax deductions lower your taxable income, which can reduce the amount of tax you owe to the government. Examples of tax deductions can include expenses related to business operations, charitable contributions, or mortgage interest and property tax deductions for homeowners.
9 tax deductions for homeowners
As a homeowner, you may be eligible for several tax deductions that can help reduce your taxable income. Common tax deductions for homeowners include:
You can deduct the interest you’ve paid on your mortgage loan, up to a certain limit. This deduction applies to both primary and secondary residences.
The property taxes you’ve paid on the real estate you own can be deducted from taxable income. This deduction is particularly helpful if you itemize your deductions.
If you use a portion of your home exclusively and regularly for business purposes, you may be able to deduct expenses related to the business use of your home, such as a percentage of your mortgage interest, property taxes, and utilities.
Interest paid on home equity loans or lines of credit may be deductible if the funds are used to buy, build, or substantially improve your home that you used to secure the loan.
If you’ve paid for mortgage points to secure a lower interest rate, those can be deducted in the year they are paid.
You may be eligible for tax deductions for making energy-efficient home improvements, such as installing solar panels, energy-efficient windows, or insulation.
If you moved for work-related reasons and meet certain distance and time requirements, you may be able to deduct reasonable moving expenses.
If you experience a loss due to events like natural disasters, you may be eligible to deduct losses on your taxes that weren’t covered by insurance. This tax deduction is subject to rules and limitations.
If you sell your primary residence and meet certain ownership and use requirements, you may be able to write off up to $250,000 of the gain ($500,000 for married couples filing jointly) from your income.
Tax laws change frequently, and this list may not include all possible deductions for homeowners. A tax professional can help you take advantage of all available deductions.
What homeowner expenses are not tax deductible?
Not all costs associated with homeownership are eligible for tax deductions. Some common expenses that are generally not tax deductible include:
Homeowners association (HOA) fees
Monthly or annual fees you pay to an HOA for the maintenance of common areas, community amenities, and other shared expenses.
Home maintenance and repairs
Expenses related to routine home maintenance, repairs, and renovations, including painting, plumbing repairs, and fixing leaks. An exception could be if you make energy-efficient home improvements.
Utilities
Monthly utility bills, such as water, gas, and electricity, are considered personal expenses.
Closing costs
While certain closing costs may be added to the cost basis of your home for future capital gains tax calculations, most closing costs are not immediately deductible.
Home depreciation
Homeowners cannot deduct the depreciation of their primary residence, as it is considered a personal asset. However, depreciation may be relevant for rental or investment properties.
Home improvements for personal use
Home improvements made for personal enjoyment, such as a swimming pool or a home theater, are not typically tax deductible.
Consult with a financial advisor
A financial advisor can offer valuable advice tailored to your specific financial situation to help you optimize the tax benefits available to you.