Homeownership comes with several potential tax benefits, from mortgage interest deductions to a much higher SALT cap in 2026. However, two federal home-energy tax credits that used to appear on this list — the solar credit and the energy-efficient improvement credit — ended for property placed in service after December 31, 2025, under the One Big Beautiful Bill Act (OBBBA). Here’s every deduction still available in 2026, and a clear note on what’s no longer available.
Overview: Homeowner Tax Benefits (2026)
Tax Benefit
Type
Requires Itemizing?
Status in 2026
Mortgage interest deduction
Deduction
Yes
Available — $750,000 debt limit
Property tax deduction
Deduction
Yes
Available — part of the $40,400 SALT cap
Mortgage points deduction
Deduction
Yes
Available
SALT deduction ($40,400 cap in 2026)
Deduction
Yes
Available, phases out above $505,000 MAGI
Home office deduction
Deduction
No (Schedule C)
Available — self-employed only
Energy efficient home improvement credit (25C)
Credit
No
Ended — not available for property placed in service after Dec 31, 2025
Residential clean energy credit / solar (25D)
Credit
No
Ended — not available for property placed in service after Dec 31, 2025
Capital gains exclusion on sale
Exclusion
No
Available — 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 — 2026 Update)
The SALT cap was $10,000 per return from 2018 through 2025. The One Big Beautiful Bill Act raised it to $40,400 for 2026 ($20,200 married filing separately), phasing out above $505,000 MAGI down to a $10,000 floor. See the full SALT deduction guide for the phase-out mechanics.
Filing Status
SALT Cap (2026)
Includes
Single
$40,400
Property tax + state income tax (or state sales tax)
Married Filing Jointly
$40,400
Same (combined)
Married Filing Separately
$20,200
Same (half the cap)
SALT Impact by State (2026 Cap)
State
Avg Property Tax ($400K Home)
Avg State Income Tax ($100K Income)
Total SALT
Over the 2026 Cap?
New Jersey
$8,920
$4,200
$13,120
No — fully deductible under $40,400 cap
New York
$6,480
$5,800
$12,280
No — fully deductible under $40,400 cap
California
$3,000
$6,200
$9,200
No
Illinois
$8,280
$4,950
$13,230
No — fully deductible under $40,400 cap
Texas
$6,720
$0
$6,720
No
Florida
$3,440
$0
$3,440
No
At these typical income and home value levels, none of these households hit the 2026 cap — a major change from 2018–2025, when three of these examples would have lost several thousand dollars of deduction to the old $10,000 limit. High earners above the $505,000 MAGI phase-out threshold would see a reduced benefit even at these SALT levels.
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: Ended for 2026
Important update: Both federal home-energy tax credits that used to apply here ended under the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025:
Credit
Prior Benefit
2026 Status
Energy Efficient Home Improvement Credit (Section 25C) — heat pumps, insulation, windows, doors
Up to $3,200/year (30% of cost)
Not available for property placed in service after December 31, 2025
Residential Clean Energy Credit (Section 25D) — solar panels, battery storage, geothermal
30% of cost, no annual cap
Not available for property placed in service after December 31, 2025
If you installed qualifying equipment on or before December 31, 2025, you can still claim the credit on the tax return for that year. Equipment placed in service in 2026 or later does not qualify for either credit under current law. See energy-efficient home improvement credit and solar tax credit for the full details on what changed and what (if anything) has replaced these credits.
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 (2026 SALT Cap)
Should You Itemize? (MFJ, Standard Deduction = $32,200)
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; all SALT totals shown here fall well under the $40,400 cap, so none are reduced in this table.
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)
Solar panels / home energy improvements
No
Federal credit ended for property placed in service after Dec 31, 2025
The property tax deduction is subject to the $40,400 SALT cap in 2026 — see SALT deduction for how that limit applies when you have both property tax and state income tax. Homeowners who itemize use Schedule A to claim mortgage interest, property tax, and charitable contributions. For the current status of federal home-energy tax credits, see energy-efficient home improvement credit and solar tax credit.
WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.
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