What can homeowners deduct on their taxes?

Homeowners who itemize can deduct mortgage interest (on up to $750,000 of debt), property taxes (up to the $10,000 SALT cap), mortgage points paid at closing, and home office expenses (if self-employed). Energy-efficient home improvement credits are available regardless of whether you itemize.

Is it worth itemizing as a homeowner?

It depends on your total deductions. In 2026, the standard deduction is $30,000 for married filing jointly. You should itemize only if your mortgage interest + property taxes (capped at $10,000 SALT) + other deductions exceed $30,000. This is more common for homeowners with large mortgages in high-tax states.

Can I deduct home improvements on my taxes?

Generally, home improvements are not immediately tax-deductible. However, they add to your home's cost basis, which reduces capital gains when you sell. Energy-efficient improvements (solar panels, heat pumps, insulation) qualify for tax credits of 30% of the cost. If you have a home office, improvements to that space may be deductible.

Tax Deductions for Homeowners: Every Write-Off You Can Claim (2026)

Homeownership comes with several potential tax benefits, from mortgage interest deductions to energy credits. However, the high standard deduction means many homeowners no longer benefit from itemizing. Here’s every available deduction and whether it applies to you.

Overview: Homeowner Tax Benefits

Tax Benefit	Type	Requires Itemizing?	Who Qualifies
Mortgage interest deduction	Deduction	Yes	Homeowners with mortgage
Property tax deduction	Deduction	Yes	All homeowners
Mortgage points deduction	Deduction	Yes	Paid points at closing
SALT deduction ($10,000 cap)	Deduction	Yes	Those paying state/local taxes
Home office deduction	Deduction	No (Schedule C)	Self-employed only
Energy efficient home improvement credit	Credit	No	All homeowners making qualifying improvements
Residential clean energy credit	Credit	No	Solar, wind, geothermal, battery storage
Capital gains exclusion on sale	Exclusion	No	Lived in home 2 of last 5 years

Mortgage Interest Deduction

Rules and Limits

Factor	Details
Deductible on	Primary residence + one second home
Mortgage debt limit	$750,000 (loans originating after Dec 15, 2017)
Grandfathered limit	$1,000,000 (loans originating before Dec 16, 2017)
HELOC interest	Deductible only if used to buy, build, or substantially improve the home
Who reports	Lender sends Form 1098

Mortgage Interest Deduction by Loan Size

Mortgage Balance	Interest Rate	Annual Interest	Tax Savings (at 22%)	Tax Savings (at 24%)
$200,000	6.5%	$12,800	$2,816	$3,072
$300,000	6.5%	$19,100	$4,202	$4,584
$400,000	6.5%	$25,300	$5,566	$6,072
$500,000	6.5%	$31,400	$6,908	$7,536
$750,000	6.5%	$46,200	$10,164	$11,088

First-year interest amounts shown (interest is highest in early years).

Mortgage Interest Over Time

Loan Year	Annual Interest ($350,000 at 6.5%)	Running Deduction Value
Year 1	$22,500	High
Year 5	$21,100	High
Year 10	$18,700	Moderate
Year 15	$15,400	Moderate
Year 20	$10,800	Lower
Year 25	$5,300	Low
Year 30	$600	Minimal

Property Tax Deduction (SALT Cap)

Filing Status	SALT Cap	Includes
Single	$10,000	Property tax + state income tax (or state sales tax)
Married Filing Jointly	$10,000	Same (combined)
Married Filing Separately	$5,000	Same (half the cap)

SALT Cap Impact by State

State	Avg Property Tax ($400K Home)	Avg State Income Tax ($100K Income)	Total SALT	Over the Cap?
New Jersey	$8,920	$4,200	$13,120	Yes (+$3,120)
New York	$6,480	$5,800	$12,280	Yes (+$2,280)
California	$3,000	$6,200	$9,200	No
Illinois	$8,280	$4,950	$13,230	Yes (+$3,230)
Texas	$6,720	$0	$6,720	No
Florida	$3,440	$0	$3,440	No

Mortgage Points Deduction

Type of Points	Deductible?	How
Points paid at purchase (closing)	Yes	Fully deductible in the year paid
Points paid on refinance	Yes	Amortized over life of loan
Points paid by seller	Yes	Buyer can deduct (reduces basis)

Points Deduction Example

Scenario	Points Paid	Deduction	Tax Savings (22%)
Purchase: 1 point on $400,000 loan	$4,000	$4,000 in Year 1	$880
Refinance: 1 point on $300,000 loan (30-year)	$3,000	$100/year for 30 years	$22/year

Energy Tax Credits

Energy Efficient Home Improvement Credit (25C)

Improvement	Credit	Annual Cap
Heat pumps (air source or geothermal)	30% of cost	$2,000/year
Heat pump water heaters	30% of cost	$2,000/year
Biomass stoves/boilers	30% of cost	$2,000/year
Central air conditioning	30% of cost	$600
Furnaces and boilers	30% of cost	$600
Insulation and air sealing	30% of cost	$1,200
Windows and skylights	30% of cost	$600
Exterior doors	30% of cost	$500 ($250 per door)
Electrical panel upgrade	30% of cost	$600
Energy audit	30% of cost	$150
Annual aggregate cap	—	$3,200

Residential Clean Energy Credit (25D)

System	Credit	Annual Cap
Solar panels (electric)	30% of cost	No cap
Solar water heating	30% of cost	No cap
Wind turbines	30% of cost	No cap
Geothermal heat pumps	30% of cost	No cap
Battery storage (3+ kWh)	30% of cost	No cap

Solar Panel Example

Solar System Cost	30% Federal Credit	Net Cost After Credit
$15,000	$4,500	$10,500
$20,000	$6,000	$14,000
$25,000	$7,500	$17,500
$30,000	$9,000	$21,000

Credit can be carried forward if it exceeds your tax liability.

Capital Gains Exclusion When Selling

Section 121 Exclusion

Filing Status	Capital Gains Exclusion	Ownership/Use Test
Single	Up to $250,000	Owned and lived in home 2 of past 5 years
Married Filing Jointly	Up to $500,000	Same (at least one spouse meets ownership, both meet use test)

Example: Calculating Gain on Home Sale

Item	Amount
Sale price	$550,000
Original purchase price	$300,000
+ Capital improvements	$50,000
Adjusted basis	$350,000
Capital gain	$200,000
Exclusion (MFJ)	$500,000
Taxable gain	$0

What Adds to Your Basis (Reduces Future Gain)

Adds to Basis	Does NOT Add to Basis
Kitchen renovation	Repairs (fixing leaky faucet)
Room addition	Routine maintenance
New roof	Painting
Bathroom remodel	Landscaping maintenance
New HVAC system	Cleaning/pest control
Finished basement	Home warranty
New windows/doors	Homeowners insurance

Itemizing Threshold Analysis

Should You Itemize? (MFJ, Standard Deduction = $30,000)

Scenario	Mortgage Interest	Property Tax*	Charity	SALT Total*	Total Itemized	Itemize?
Small mortgage, low-tax state	$6,000	$3,000	$2,000	$5,000	$13,000	No
Mid mortgage, mid-tax state	$15,000	$5,000	$3,000	$10,000	$28,000	No
Large mortgage, high-tax state	$25,000	$8,000	$5,000	$10,000**	$40,000	Yes
Mid mortgage + charitable bunching	$15,000	$5,000	$15,000	$10,000	$40,000	Yes

*Property tax and state income tax combined under SALT cap. **SALT capped at $10,000 even though actual SALT may be higher.

Deductions NOT Available to Homeowners

Expense	Deductible?	Notes
Homeowners insurance	No	Not deductible (unless home office)
HOA fees	No	Not deductible (unless home office or rental)
Home repairs/maintenance	No	Not deductible (unless home office or rental)
Furniture and appliances	No	Not deductible
Landscaping	No	Not deductible
Title insurance	No	Added to basis instead
Home warranty	No	Not deductible
Moving expenses	No	Eliminated for most taxpayers (military exception)
Mortgage insurance (PMI)	No	Deduction has expired (may be renewed by Congress)