Tax season is here, and homeowners can save money by using special deductions. The IRS opened the 2025 tax filing season on January 27, and you have until April 15 to file your taxes (unless you get an extension). This is a great time for homeowners to learn about the tax breaks they can claim.
But to get the most out of these savings, you need to itemize your deductions (listing specific expenses you can deduct) instead of taking the standard deduction. This is worth doing if the total of your itemized deductions is higher than the standard deduction.)
For this year, the standard deduction is:
- $14,600 for single filers or those filing separately.
- $29,200 for married couples filing jointly.
Here are eight key tax breaks every homeowner should know about to make the most of tax season.
1. Mortgage Interest Deduction
One of homeowners’ most common tax breaks is the mortgage interest deduction. If you have a mortgage, you can deduct the interest you’ve paid on the loan. The amount you can deduct depends on your loan size and filing status.
For loans up to $750,000 ($375,000 for married couples filing separately), you can deduct the interest. This rule applies to loans taken after December 16, 2017. If your mortgage was taken before that date, the limit is higher—up to $1 million for couples filing jointly. Keep in mind, the deduction varies based on whether you’re filing as single, jointly, or separately, and the size of your loan.
2. Property Tax Deduction
Property taxes are another major deductible expense. You can deduct up to $10,000 in state and local taxes, which includes both property taxes and state income taxes. If you live in a state without income tax, this deduction could be more helpful. However, remember that the $10,000 limit applies to both property and income taxes combined.
3. Home Office Deduction
If you work from home and use part of your home solely for business, you may be eligible for the home office deduction. This applies to self-employed individuals, independent contractors and gig economy workers.
There are two ways to claim the deduction: the simplified method, where you can deduct $5 per square foot of your home office (up to 300 square feet), or the regular method, where you calculate the percentage of your home used for business and apply that percentage to your home expenses such as utilities, insurance, and maintenance.
However, be careful: these deductions are closely monitored by the IRS. If your home office isn’t used exclusively for business, it may not qualify for this break.
4. Residential Energy-Efficient Tax Credits
Making energy-efficient upgrades to your home can help lower utility costs and may also qualify you for tax credits. Homeowners who install solar panels, energy-efficient HVAC systems, or other eco-friendly upgrades can get a tax credit worth up to 30% of the cost of these improvements.
For example, you can claim credits for energy-efficient doors, windows, skylights, heat pumps, water heaters and home energy audits. But there are limits on how much you can claim.
The IRS allows a maximum credit of up to $1,200 per year for energy-efficient property costs and certain home improvements. You can claim up to $250 per exterior door (with a $500 total limit), up to $600 for exterior windows and skylights, and up to $150 for home energy audits. For qualified heat pumps, water heaters, biomass stoves, or biomass boilers, the credit limit is $2,000 a year.
5. HOA Fees
Homeowners’ Association (HOA) fees are a common expense many overlook. In some cases, you may be able to deduct HOA fees if you use part of your home for rental or business purposes. For example, if you rent out part of your home or use it as a vacation rental, you can deduct the portion of your HOA fees related to the time it’s rented out.
Similarly, if you use part of your home as a home office, you can deduct a percentage of the HOA fees based on the portion of your home used for business.
If your home office occupies 15% of your home’s total square footage, you can typically deduct 15% of your HOA fees as a business expense.
6. Home Expenses for Business Use
If you run a business from home, you can deduct a portion of various home expenses like mortgage interest, utilities, property taxes, insurance and maintenance costs. However, those deductions only apply to the part of your home that is used exclusively for business. Remember that these deductions are available only to self-employed individuals, not employees who receive a W-2.
7. Points Paid on a Mortgage
Mortgage points, or discount points, are a one-time fee you pay to lower your mortgage interest rate. One point usually costs 1% of your loan amount and can be deducted in the year it’s paid.
If you bought or refinanced your home with a higher interest rate, paying mortgage points upfront can help lower the rate and give you a larger tax deduction in the first year. Although doing so can be complex and requires careful planning, it could be a good option if you can afford the upfront cost.
8. Medical Home Improvements
In some cases, home improvements made for medical reasons can be deducted as medical expenses. If the changes are necessary for your or a dependent’s medical care, they may qualify for a tax deduction. Examples can be installing wheelchair ramps, bathroom railings, or other modifications to meet medical needs.
Navigating Tax Deductions and Benefits
Navigating deductions and tax benefits can be complex as they depend on how you use your home. For a primary residence, the main deductions will usually be mortgage interest and property taxes.
But if you’re using the property for rental or business purposes, you can also deduct expenses like repairs, property management fees and depreciation.
Seniors and multigenerational households also have extra opportunities to lower their tax burden. Seniors may benefit from reverse mortgages and property tax exemptions in certain states. Multigenerational households caring for elderly parents may qualify for tax benefits related to medical home improvements and caregiving expenses.
Special Considerations: Capital Gains Tax
When you sell your home, you can avoid paying capital gains tax on up to $250,000 ($500,000 for married couples) of profit if the home was your primary residence for at least two of the last five years. This great benefit can help homeowners sell their property without facing large tax penalties.
For those owning rental property, a 1031 exchange might be an option. This allows you to defer taxes when exchanging one property for another. However, this strategy has certain rules and should be used carefully with the guidance of a tax professional.
Property Taxes at Closing
Property taxes at closing are typically divided between the buyer and the seller on a prorated basis. The seller is responsible for the property taxes up until the closing date. If the seller has already paid the property taxes for the year, they will receive a refund from the buyer for the portion that applies to the time after the closing. The buyer takes over responsibility for taxes from the closing date forward.
Don’t Leave Money on the Table
Because tax filings can be complex for homeowners, it’s a good idea to consult a tax professional. They can help you decide whether to itemize your deductions or take the standard deduction, helping you get the best possible tax outcome.
