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Preparing for Tax Season: Homeownership Deductions You Don’t Want to Miss


Tax season is here, and if you're a homeowner, you may be leaving money on the table! Owning a home comes with several tax benefits that can lower your taxable income and boost your refund. Here are the key homeowner tax deductions and credits to keep in mind before filing your 2025 taxes.


1. Mortgage Interest Deduction

One of the biggest perks of homeownership is the ability to deduct mortgage interest. If you have a mortgage on your primary or secondary home, you can deduct interest payments on up to $750,000 of mortgage debt.

Pro Tip: If you bought a home in the last year, check your Form 1098 from your lender—it outlines how much mortgage interest you paid.


2. Property Tax Deduction for Homeowners

Homeowners can deduct up to $10,000 in state and local property taxes (or $5,000 if filing separately). This deduction can help offset the cost of property ownership, especially in areas with higher tax rates.

Before filing, check with your local tax office to confirm how much you paid in property taxes last year.


3. Home Office Deduction

Do you work from home? You might qualify for the home office deduction if you're self-employed or a freelancer.

To be eligible, the space must be used exclusively for business. You can calculate this deduction based on the following:

  • The standard method (percentage of home used for work)

  • The simplified method ($5 per square foot, up to 300 square feet)

Pro Tip: Keep track of expenses like utilities, internet, and office supplies—some may be deductible, too!


4. Energy-Efficient Home Improvements

You could claim a tax credit if you made energy-efficient upgrades in 2024. Eligible improvements include:

  • Solar panels & solar water heaters

  • Energy-efficient windows & doors

  • High-efficiency HVAC systems

This credit can be worth up to 30% of qualifying costs, helping homeowners save on taxes and utility bills.


5. Capital Gains Exclusion on Home Sales

If you sold your primary residence in 2024, you may be able to exclude up to $250,000 in capital gains from taxes ($500,000 for married couples).

To qualify, you must have lived in the home for at least two of the last five years before selling. If your profit exceeds the exclusion limit, only the excess amount is taxed.


6. Points Paid on Mortgage or Refinancing

If you bought a home or refinanced in 2024, you can deduct loan discount points. These are fees paid upfront to lower your mortgage rate and can be deducted in full or spread out over the life of the loan.


7. Mortgage Insurance Premium Deduction (If Extended for 2024)

In previous years, homeowners with a conventional, FHA, or VA loan could deduct private mortgage insurance (PMI) premiums. Keep an eye out for IRS updates to see if this deduction is extended for 2024.


Maximize Your Tax Savings with Expert Help

Tax laws change, and deductions vary based on your financial situation. Working with a tax professional or real estate expert ensures you take advantage of all available savings.

Thinking about buying, selling, or making home improvements this year? Contact our team for guidance on making smart homeownership decisions that benefit you financially!


 

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THe Morris Team

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