Additional Coverage:
- 8 Little-Known Tax Deductions Every Homeowner Should Know About (financebuzz.com)
Local Homeowners: Don’t Miss These Key Tax Deductions!
Owning a home in the US is a big financial commitment, and with today’s economy, every dollar saved counts. Beyond the initial down payment, monthly mortgage, and insurance premiums, you’re also responsible for the ongoing maintenance of your property, which can easily add up to hundreds annually.
The good news for many homeowners is that tax deductions can significantly lighten that financial load. Here are some of the most important money-saving tax breaks that could ease your stress and help you keep more of your hard-earned cash.
1. The Standard Deduction: Keep it Simple
Sometimes, the easiest path is the best. As a taxpayer, you have two main options: either meticulously list out every deductible expense to lower your taxable income, or simply take the IRS’s standard deduction. You can’t do both, so it’s one or the other.
For the 2026 tax year, the standard deduction is set at $16,100 for individuals (including married individuals filing separately) and $32,200 for married couples filing jointly. If this amount reduces your taxable income more than itemizing would, your tax professional will likely advise you to stick with the standard deduction.
2. Medical Expenses for Disability-Related Home Renovations
If you or someone living in your home requires specific accommodations due to a disability, you might be able to deduct certain related home renovations as medical expenses. Large-scale changes, such as installing wheelchair ramps, can be quite costly.
As long as these modifications are made out of necessity-and not, for example, for personal preference or to simply boost your home’s market value-they can generally be written off as capital expenses on your tax return.
3. Property Taxes
Property taxes are a state and local matter, not federal, meaning the amount you pay each year is determined by your city, county, and/or state. This leads to significant variations, with homeowners in some states paying substantially more than others. For instance, in the 2026 tax year, Hawaii’s estimated property tax rate is a low 0.27%, while New Jersey’s is projected to be 2.23%.
You can deduct up to $40,000 (if married filing jointly) in total state and local taxes, including property taxes, on your federal tax return. If your property tax bill is modest, it might not be worth itemizing compared to taking the standard deduction. However, if you face a particularly high property tax bill, it’s worth discussing with your accountant.
4. Other Real Estate Property Taxes
Do you own an investment property, or perhaps a second home for an Airbnb side hustle? The good news is you can also write off the property taxes for those as well.
Just remember, the $40,000 cap applies to the total amount of property taxes paid on personal property and real estate, along with state and federal income taxes.
5. Home Mortgage Interest
As of January 2026, the average interest rate on a 30-year home loan stands at an eye-watering 6.27%. This means homeowners who secured a recent loan could be paying tens of thousands in mortgage interest this year alone.
Fortunately, these mortgage interest payments can be deducted from your taxable income. However, if your loan was taken out on or after December 17, 2017, you can only deduct interest paid on the first $750,000 (for married individuals filing jointly) or $375,000 (for individuals or married individuals filing separately) of debt. For loans taken out before December 17, 2017, the deduction applies to interest paid on up to $1 million (married filing jointly) or $500,000 (filing individually).
6. HELOC Interest
Home equity loans and Home Equity Lines of Credit (HELOCs) are popular tools for homeowners looking to finance significant renovations or essential repairs.
Depending on how you utilize the funds, you might be able to deduct the interest paid on your HELOC. The key here is that the money must have been used to “buy, build, or substantially improve” (as the IRS states) your primary residence.
The same interest deduction limits that apply to home mortgage interest also apply to HELOC interest. Homeowners can only deduct interest incurred on their first $750,000 (or $375,000, based on filing status) of debt. It’s crucial to note that this $750,000/$375,000 cap covers all property-related loan interest, including both your primary mortgage and any HELOCs.
7. Mortgage (Discount) Points
Mortgage or discount points are fees some borrowers pay upfront when taking out a mortgage loan. Essentially, these points are pre-paid interest on a loan that hasn’t yet accrued that interest. Since home mortgage interest is tax-deductible, so are qualifying mortgage points.
However, these points must meet specific criteria to be tax-deductible. For instance, paying mortgage points must be a common practice among lenders in the area where you secured your loan.
8. Home Office Costs
The IRS has a fairly strict definition of a home office: it must be a space in your home used exclusively and entirely for your self-employment. This means that a room you call your office but also serves as a library or entertainment room won’t qualify.
Important to note: employees who work from home for an employer do not qualify for this deduction. If you work for an employer but also have a side hustle from home, your home office must be used solely for that side venture to be eligible.
There are two ways to calculate this deduction. The simplified method allows you to deduct $5 for every square foot of your home office, up to a maximum of 300 square feet or $1,500. Alternatively, you can deduct home office costs based on the percentage of your home dedicated to your office space, though this method requires much more meticulous record-keeping and precise calculations.
Bottom Line
Homeownership, while rewarding, can certainly feel like a heavy financial lift. But you’re not alone in navigating the financial complexities.
If you’re wondering about other tax deductions you might be overlooking, don’t hesitate to consult with your accountant or a tax professional. They can provide personalized advice to help you maximize your tax return come tax season.
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- 8 Little-Known Tax Deductions Every Homeowner Should Know About (financebuzz.com)