There's just a little more than a month before the tax filing deadline of April 15. For homeowners who haven't filed taxes, now is the time to make sure you're not leaving money on the table.
The One Big, Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025, significantly affects federal taxes, credits, and deductions. For homeowners, it's important to go over what you can and cannot claim—this includes any programs or housing allowances you may be eligible for.
The biggest expense may be the monthly mortgage. If you have a mortgage on your home, the payment may bundle other costs of owning a home. The state and local real estate taxes, also known as SALT, is subject to a limit.
"This is a major change, as the SALT deduction was previously unlimited until Trump's 2017 Tax Cuts and Jobs Act, which placed the $10,000 cap, effectively penalizing high-income people living in states with state and local taxes," Chad Cummings, CPA and attorney at Cummings & Cummings Law, tells Realtor.com®.
"Even with the raised cap, a taxpayer must itemize on Schedule A to capture this benefit, meaning total deductions must clear above $15,750 for a single filer or $31,500 for a couple in 2025. To put that in perspective, a homeowner paying $20,000 in property taxes and $15,000 in state income taxes now deducts $35,000 instead of $10,000, a gap that translates to thousands in reduced tax liability."
Home mortgage interest
The Internal Revenue Service says, aside from SALT, homeowners can also deduct home mortgage interest within the allowed limits.
The IRS says you can deduct the entire part of your payment that is for mortgage interest for acquisition debt (or debt that qualifies as acquisition debt) if you itemize your deductions on Schedule A (Form 1040).
Capital gains tax
If you sold your home, you could owe a capital gains tax. However, the IRS states that if you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income—or up to $500,000 of that gain if you file a joint return with your spouse.
Home equity loans
Not all interest paid on a home equity loan or a home equity line of credit (HELOC) is tax-deductible.
The IRS points out that for tax years after 2017, if home equity loans or lines of credit secured by your main home or second home are used to buy, build, or substantially improve the residence, then the interest you pay on the borrowed funds is classified as home acquisition debt and may be deductible, subject to certain dollar limitations.
Interest on the same debt used to pay personal living expenses, such as credit card debts, is not deductible.
Home energy tax credits
If you made energy improvements to your home, tax credits are available for a portion of the eligible expenses. You can claim either the Energy Efficient Home Improvement Credit or the Residential Clean Energy Credit for the year when you made the qualifying improvements.
The qualifying improvements need to meet government standards, which the IRS has outlined on its site.
Moving forward after the current tax year (2025), Cummings points out that the OBBBA eliminates many energy savings credits.
"The OBBBA terminated the [Internal Revenue Code] Section 25C energy-efficient home improvement credit for property placed in service after Dec. 31, 2025, and terminated the IRC Section 25D residential clean energy credit for expenditures made after Dec. 31, 2025.
"Both credits are gone for the 2026 tax year and beyond. A homeowner who installed a heat pump or solar panels and had the work completed by Dec. 31, 2025, may still claim the credit on the 2025 return."
Home office deduction
People who work from home are still able to deduct the business use of their home—but again, only if it meets the IRS checklist for qualified deductions.
Taxpayers can no longer claim a deduction for the use of a home office as an employee, but they may use the IRS "simplified option" checklist when figuring out what's tax-deductible. Some of those highlights include:
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Standard deduction of $5 per square foot of home used for business (maximum 300 square feet)
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Allowable home-related itemized deductions claimed in full on Schedule A (e.g., mortgage interest, real estate taxes)
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No home depreciation deduction or later recapture of depreciation for the years the simplified option is used
What is not tax-deductible
With all the tax law changes, including new rules put in place by the OBBBA, the IRS outlines what homeowners cannot deduct, including the following:
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Insurance, including fire and comprehensive coverage and title insurance
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The amount applied to reduce the principal of the mortgage
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Wages paid to domestic help
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Depreciation
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The cost of utilities, such as gas, electricity, or water
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Forfeited deposits, down payments, or earnest money
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Internet or Wi-Fi
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Homeowners association fees, condominium association fees, or common charges
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Home repairs
"My advice to homeowners: Don't lose the forest from the trees. Understanding the taxation of your primary residence is important, but it needs to be part of a broader financial, estate planning, and risk management conversation, thinking about insurance coverages and how your assets will pass to your heirs, among other things," Cummings advises.
"Also, it's worth remembering that just as the OBBBA amended the tax law, future administrations may reverse these reversals or create entirely new credits or planning opportunities. Tax law never changes ... until it does."
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