Seven key tax breaks for homeowners

There are many benefits that come with owning a home, and one of those benefits comes during tax season. Whether you are a first-time homebuyer or seasoned homeowner, there are available tax breaks you could take advantage of.  

Tax breaks could help make homeowners more affordable to many people hoping to enter the housing market. Make sure you talk with a tax expert to learn more about these seven tax breaks or to learn if you qualify for any others. 

To enter the housing market and take advantage of these tax breaks, start your mortgage application today! 

This tax break applies toward most loans secured for your primary or second home. These loans may include a mortgage to buy your home, a mortgage for a second home that you rent out for fewer than 14 days a year, a home equity loan or a home equity line of credit (HELOC).  

There’s a catch: The combined balance of the first mortgage and any additional loans may not exceed certain limits. In addition, different limits apply based on when you secured your loans. Here’s how this deduction works in 2026. 

If you took out home loans before Dec. 15, 2017, you are grandfathered into pre-reform limits: 

• $1 million for married taxpayers filing jointly
• $500,000 for single or married taxpayers filing separately

If you took out home loans on or after Dec. 15, 2017, your total home loan limits: 

• $750,000 for married taxpayers filing jointly
• $375,000 for single or married taxpayers filing separately

You might be able to deduct property taxes you pay on your primary home, as well as on a vacation property. There are certain restrictions, such as the part of your tax bill that goes toward water or trash services. Also, since the implementation of the Tax Cuts and Jobs Act, foreign property taxes can no longer be deducted. Property tax deduction is capped at $40,000, or $20,000 if you are married and filing separately. 

If you’ve taken out a loan for home improvement, you’re likely able to deduct interest on it, provided your total home loans don’t exceed the limits mentioned above. This includes cash-out refinance loans as well as home equity loans and HELOCs. Funds from the loan or cash-out refinance must be used to build or improve your home, or the interest will not be tax-deductible. Investment and rental property repairs and maintenance can usually be deducted by lenders in the year they are paid. Talk with a tax professional to learn more. 

Many homeowners pay points to get a better rate for a mortgage. If you’ve paid points, they might offer tax breaks associated with the purchase or refinance of a home. These points might also be labeled loan origination fees, maximum loan charges, loan discount or discount points. 

The way in which you take this deduction will depend on IRS requirements. According to the IRS, the general rule is you can't deduct the full amount of points in the year paid. Because they are prepaid interest, they are deducted ratably over the life of the mortgage. It’s best to speak with your chosen tax professional for more details. 

Going green is great for more than making your home energy efficient. It could also save you money*. While the Tax Cuts and Jobs Act eliminated many energy efficiency credits, the Bipartisan Budget Act of 2018 (BBA) extended others.Specifically, the BBA includes tax credits for solar panels and solar water heaters. There are also provisions for small wind energy, geothermal heat pumps and fuel-cell upgrades. 

If you use part of your home as an office for your small business, you may be able to claim a deduction for the operating expenses and deprecation of your home. To qualify, your space needs to be separate from any other personal space in your home. 

You can also deduct transportation expenses used to travel round-trip from your home office to a client or customer’s place of business. 

Private mortgage insurance (PMI) required for most mortgages with less than 20% of the principal amount paid is once again deductible as of 2026. 

When filing taxes in 2027, PMI you pay could be tax-deductible but will count toward your mortgage interest deduction amount. However, full deduction is available for homeowners who make less than $100,000 a year. 

Homeowners looking to take advantage of tax deductions should start by reviewing the terms of their mortgage and talking to a tax expert to learn about which deductions they could qualify for. 

Reviewing your mortgage can help you see where your money is going, including PMI, home equity interest and property taxes. This can help inform you on which deductions you should focus on and talk to a tax expert about. 

Tax deductions can ease the burden of homeownership to buyers who feel that purchasing a home is just out of reach. 

If you are not yet a homeowner but feel that these tax deductions might make buying a home possible, you can start your mortgage application today. 

_{*Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Rate for current rates. Restrictions apply.} 

_{Rate does not provide tax advice. Please contact your tax advisor for any tax-related questions.} 

_{Note that the information contained here should not be construed as financial advice. You should always defer to your tax professional or CPA with any questions regarding available deductions.} 

_{All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Rate does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Rate Rate its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.}