The expenses of owning a home are often counterbalanced by the tax advantages.
Buying a home in the US is expensive enough, but even after you save up for your down payment, the big money doesn’t stop there. Experts generally recommend budgeting 1% to 3% of your home’s value for annual maintenance. US homeowners pay an average of $10,867 annually, according to Zillow and Thumbtack.
All those home expenses come with a thin silver lining: Tax credits and deductions for your house can lead to a bigger tax refund when you file your federal income taxes. For homeowners, learning as much as you can about your potential tax benefits will help you maximize your refund.
This story is part of Taxes 2025, CNET’s coverage of the best tax software, tax tips and everything else you need to file your return and track your refund.
Most homeowners with mortgages know they can deduct the interest paid on their home loans, but other tax deductions and tax credits available to property owners are less obvious. Here’s everything to know about the tax breaks for homeowners in the upcoming tax season.
How do homeowner tax breaks work?
Most of the federal income tax benefits for homeowners are tax deductions, which are reductions of your taxable income. The less of your income that is taxed, the less money you pay in taxes.
When you file your tax return, you must decide whether to itemize your deductions or take the standard deduction — for the 2025 tax year, that’s $15,750 for single tax filers and married filing separately, $31,500 for joint married filers or $23,625 for heads of household.
To take advantage of most homeowner tax deductions, you’ll need to itemize them using Form 1040 Schedule A. Your decision to itemize will depend on whether your itemized deductions are greater than your standard deduction. All of the best tax software can quickly help you decide whether to take the standard deduction or itemize (as well as help you fill out all of the tax forms mentioned in this article).
Tax credits for homeowners don’t require you to itemize. They directly reduce the amount of taxes you owe, and you can usually get those credits whether or not you itemize deductions.
Mortgage interest deduction can be a huge tax break
Mortgage interest — or the amount of interest you pay on your home loan yearly — is one of the most common tax deductions for homeowners. It’s also often the most lucrative, particularly for new homeowners whose payments generally go more toward loan interest during the first years of a mortgage.
Homeowners filing taxes jointly and single tax filers can deduct all payments for mortgage interest on the first $750,000 of their mortgage debt, or mortgage debt up to $1,000,000 if you’re deducting mortgage interest from before Dec. 15, 2017. If you file separately as married, you can deduct half of those amounts: $187,500 or $250,000, respectively.
To deduct your mortgage interest, you’ll need to fill out IRS Form 1098, which you should receive from your lender in early 2025. You can then enter the amount from Line 1 on that Form 1098 into Line 8 of 1040 Schedule A.
You can deduct mortgage points as well
You can buy mortgage points, also called “discount points,” when purchasing a house to reduce the interest rate on the mortgage. Each 1% of the mortgage amount that home buyers pay over their down payment generally reduces their interest rate by 0.25%, although the exact amount will depend on the lender and the loan.
Discount points can save you big money on a 30-year mortgage by lowering the total interest you’ll have to pay across decades, but they can also save you money on your taxes when you buy them. The IRS considers mortgage points to be prepaid interest, so you can add the amount paid for points to your total mortgage interest that’s entered on Line 8 of 1040 Schedule A.
New homeowners with Mortgage Credit Certificates get a big tax break
Homeowners who have received a Mortgage Credit Certificate from a state or local government — usually acquired via a mortgage lender — can get a percentage of their mortgage interest payments back as a tax credit. Mortgage certificate credit rates vary by state and can range from 10% to 50%, up to a maximum credit of $2,000.
This homeowner tax tip is most effective if you’re a first-time homeowner, which is generously defined as not living in a home that you’ve owned for the past three years. If you’re buying your first home, be sure to ask your lender or mortgage broker to see if you qualify for an MCC.
To file for your mortgage-interest tax credit, use IRS Form 8396. Remember, you don’t need to itemize deductions to claim tax credits.
You can deduct property taxes, and the limit is much higher for 2025
Local and state real estate taxes, more commonly called property taxes, can be deducted from your taxes. For many years, this deduction was unlimited; however, the Tax Cuts and Jobs Act of 2017 introduced a $10,000 limit. Due to the passage of the One Big Beautiful Bill in July 2025, the allowable amount will now be permanently increased to $40,000, though that deduction starts to reduce at higher income levels.
To claim your property tax deduction, you’ll need to track your annual property tax payments. Your real estate taxes might also be listed in Box 10 of Form 1098 from your mortgage lender. Enter your total amount of real estate taxes paid for the year in Line 5b of 1040 Schedule A.
If you’re self-employed, you can deduct your home office
Homeowners who use any part of their house, apartment or condo “exclusively and regularly” for their own business or side gig can claim home business expenses using IRS Form 8829. These deductions are also available to renters.
The easiest way to claim a home-office tax break is by using the standard home-office deduction, which is based on $5 per square foot used for business up to 300 square feet. The “regular method” for deducting a home office involves calculating the percentage of your home that is used for business. Both methods use Form 8829 for reporting.
Home-office deductions aren’t generally available to remote employees, although there are limited exceptions.
Last chance for energy-efficiency tax credits
You can get 30% of your solar installation costs back as a tax credit.
If you made energy-efficient improvements to your home in 2025, you can likely get back some of that money in the form of tax credits, but it’s a little complicated. There are two types of tax credits for home energy improvements: the residential clean energy credit and the energy-efficient home improvement credit.
The residential clean energy credit can provide you with a 30% tax credit on any money you spend installing solar electricity, solar water heating, wind energy, geothermal heat pumps, biomass fuel systems or fuel cell property. The only limit is for fuel cell property — $500 for each half-kilowatt of capacity.
The energy-efficient home improvement credit, also known as the nonbusiness energy property credit, is then split into two categories — “residential energy property costs” and “qualified energy efficiency improvements.”
In the first case of energy property costs, you’ll get a flat tax credit of $50 to $300 for installing Energy Star-certified items like heat pumps, water heaters or furnaces. In the second case of qualified improvements, you can get a 10% tax credit for the cost of improvements like adding insulation, fixing a roof or replacing windows.
To claim tax credits for energy-efficient home improvements made in 2025, you’ll need to document your costs on IRS Form 5695. These energy-efficiency tax credits will expire after the 2025 tax year.
You can also get 30% back on electric vehicle charging stations
Electric vehicle charging stations can give you money back on your tax bill. If you install an alternative energy charging station in your home, you get a maximum credit of 30% of the cost or $1,000 (whichever is smaller). File IRS Form 8911 to claim your tax credit for the money spent on clean energy installation.
The tax credit for EV charging stations will last a little longer than the other two energy-efficiency credits. It will expire on June 30, 2026.
Deduct interest from home equity loans
Any interest from a home equity loan or second mortgage can be deducted from your taxes just like regular mortgage interest, with the important limit of maximum loan totals of $1 million or $750,000 (for joint filers) if you purchased your home after Dec. 15, 2017.
It’s also important to note that the 2017 tax law limits deductions for home equity loan interest to money that is used to “buy, build or substantially improve” homes. If you borrowed money to pay for a new car or vacation, you’re out of luck.
If you did pay interest on a home equity loan that was used directly on your residence, you can claim the deduction on the same line as mortgage interest and mortgage points — Line 8 on Form 1040 Schedule A.
When you sell, include home improvements in the cost basis
Any income you earn from selling a home is taxable as a capital gain (with a notable exclusion, see below). Your gain is calculated by the difference between your sale price for the home and your “cost basis.” That cost basis includes what you paid for the home, the price of improvements that you may have made, as well as any property loss from depreciation or casualty.
If you’ve put in a new roof, replaced a furnace, refinished floors or even landscaped the garden, be sure to include those costs to increase your adjusted basis and reduce the amount of your capital gains on the sale.
Tax exclusions for selling a primary residence
When you sell a home, you’ll need to pay taxes on the amount of money you earn from the sale as capital gains. However, if you live in the home for two of the previous five years before selling, you get a very large tax exclusion — $500,000 for married joint filers, or $250,000 for single or separate filers.
All US taxpayers receive this tax exclusion regardless of their age or the number of times they’ve benefited from it before. Note that the residence requirements apply whether you own the home or not. If you rent a house for two years and then buy it, you’re free to sell with the standard residence exclusion at any time.
You’ll likely receive the tax information about the sale of your home in Form 1099-S, and you’ll report your ultimate gain — after factoring in the $500,000/$250,000 exclusion — on IRS Form 8949. If you don’t receive a Form 1099-S and your profit on the house is less than the exclusion amount, you don’t need to report the sale on your tax return.
Deduct home improvements for medical reasons
Medical expenses can be a major tax deduction, but only if they go over 7.5% of your adjusted gross income, which is essentially your taxable income. Any home improvements — safety bars, accessibility ramps, wider doorways, railings and lifts, for example — related to medical conditions can be included in your tax deductions for medical expenses.
Keep all your receipts and invoices, and include the total cost of the improvements or additions with all of your additional medical and dental expenses on Line 1 of 1040 Schedule A.
Which home expenses can’t be deducted from taxes?
Despite all of the tax breaks available for homeowners, there are some home-related expenses that can’t be deducted from your income.
- Your down payment for a mortgage
- Any mortgage payments toward the loan principal
- Utility costs like gas, electricity and water
- Fire or homeowner’s insurance
- House cleaning or lawn maintenance
- Any depreciation of your home’s value
Everyone’s tax situation is unique. Before making major tax decisions, we recommend consulting a tax professional who can help you with both federal and state tax laws.
