Maximize Your Savings: Essential Homeowner Tax Deductions You Need to Know

As tax season approaches, homeowners have a great opportunity to maximize their savings by taking advantage of key tax deductions. Owning a home comes with various financial benefits, and understanding which deductions apply to you can help lower your taxable income and increase your refund. Here’s a guide to the most common homeowner tax deductions you should consider this year.

Take advantage of key tax advantages for homeowners.

1. Mortgage Interest Deduction

One of the biggest tax breaks for homeowners is the mortgage interest deduction. If you have a mortgage on your primary or secondary home, you can deduct the interest paid on loan amounts up to $750,000 (or $1 million for mortgages taken before December 15, 2017). Your lender should provide a Form 1098 detailing the total interest paid over the year.

2. Property Tax Deduction

Homeowners can deduct state and local property taxes up to a combined total of $10,000 ($5,000 if married filing separately). Be sure to check your records for property tax payments made throughout the year to claim this deduction.

3. Mortgage Points Deduction

If you paid discount points to lower your mortgage interest rate when purchasing your home, these points may be deductible in the year they were paid. If the points were paid for a refinance, they are generally deducted over the life of the loan.

4. Home Office Deduction

If you use part of your home exclusively for business, you may be eligible for the home office deduction. This applies to both homeowners and renters. You can choose between the simplified option, which allows a deduction of $5 per square foot (up to 300 square feet), or the regular method, which involves calculating actual expenses such as utilities, repairs, and depreciation.

5. Energy-Efficient Home Improvements

Homeowners who made energy-efficient upgrades in 2023 may qualify for tax credits rather than deductions. The Energy Efficient Home Improvement Credit covers a percentage of costs for upgrades like solar panels, energy-efficient windows, and home battery storage. The Residential Clean Energy Credit applies to renewable energy installations and has no annual cap.

6. Medical Home Improvements

If you made modifications to your home for medical reasons—such as installing ramps, widening doorways, or adding handrails—you might be able to deduct the costs as a medical expense. These must be deemed necessary for you or a dependent and not just for convenience.

7. Home Sale Exclusion

If you sold your home last year, you may be able to exclude up to $250,000 ($500,000 for married couples filing jointly) of the capital gains from your taxable income, provided you lived in the home for at least two of the last five years.

8. Mortgage Insurance Premium Deduction

For eligible homeowners who pay private mortgage insurance (PMI), those premiums may be deductible if your adjusted gross income is below a certain threshold. Check with your tax professional to see if you qualify.

9. Casualty and Theft Loss Deduction

If your home was damaged due to a federally declared disaster, you may be able to deduct losses not covered by insurance. This deduction applies only to major events declared by the federal government.

Ease your tax burden and save money.

Taking advantage of homeowner tax deductions can help ease the financial burden of homeownership. However, tax laws change frequently, so it’s always a good idea to consult with a tax professional to ensure you’re claiming all the deductions you’re entitled to.

With the right approach, your home can provide not only comfort but also valuable tax benefits. Happy filing!

Need professional tax advice? Contact a tax expert to maximize your deductions today!

Realtors® of the Treasure Coast

Are you ready to become a homeowner and take advantage of these tax savings? Laura and Ryan Maples are a husband and wife real estate team, The Maples Group. They are both natives to Florida and are Accredited Buyers Representatives by the National Association of Realtors.

Give us a call to start your home buying journey at 772-783-2585.