Eight Tax Deductions For Homeowners Under The One Big Beautiful Bill

You don’t buy a house just for the tax perks. At best, they’re a welcome bonus — especially given how expensive homeownership can be.

Below are eight homeowner tax breaks to know for the 2026 tax year (returns filed in 2027), including updates under the One Big Beautiful Bill.

Keep in mind: To claim most of these, you’ll need to itemize deductions. With higher standard deductions in 2026, fewer homeowners are expected to itemize.

Also new: Taxpayers age 65+ can claim an additional deduction through 2028 — $6,000 for single filers and $12,000 for married couples filing jointly. This phases out above $75,000 in income ($150,000 joint).

How Much Is The Standard Deduction?

2025 Standard Deduction (For Taxes Due April 15, 2026)
Married filing jointly; surviving spouses – $31,500
Head of household $23,625
Single; married filing separately – $15,750

2026 Standard Deduction (For Taxes Due April 15, 2027)
Married filing jointly; surviving spouses – $32,200
Head of household – $24,150
Single; married filing separately – $16,100

1. Mortgage Interest (including PMI in 2026)

Mortgage interest remains one of the most common homeowner deductions. For 2026, private mortgage insurance (PMI) premiums are again treated as deductible mortgage interest (note: this does not apply to 2025 returns).

You’ll benefit only if your total itemized deductions exceed the standard deduction. Mortgage interest often plays a key role when combined with medical expenses, charitable contributions, or other qualifying deductions.

2. Interest On Home Equity Loans And HELOCs

Home equity loans (HELs) and home equity lines of credit (HELOCs) can turn part of your home’s value into cash — and may offer a tax break.

For 2026, interest is deductible only if the loan proceeds are used to buy, build, or substantially improve your home. Other restrictions apply:

• Interest deductions are capped at $750,000 of total qualified home debt (first and second mortgages combined).
• If married filing separately, the limit drops to $375,000.
• You must itemize to claim the deduction.

3. Discount Points

Mortgage discount points let you pay interest upfront in exchange for a lower rate. These points are generally deductible if you itemize. As a rough guide, paying 1% of the loan amount may reduce your rate by about 0.25%. On a $400,000 mortgage, paying $4,000 in points could lower your rate from 7% to 6.75%. However, points usually make financial sense only if you plan to stay in the home at least five years.

4. Property Taxes (SALT deduction)

Property taxes may be deductible as part of the SALT (state and local tax) deduction, which has increased from $10,000 to $40,000.

This especially benefits homeowners in high-tax states. However:

• The deduction phases down for taxpayers earning over $500,000.
• You must itemize to claim it.

5. HOA Fees

Homeowners association (HOA) fees are typically not deductible.

There are limited exceptions. You may be able to deduct HOA fees if:

• The property is a rental or investment property
• You rent out part of your home
• You qualify for a home office deduction

For most primary residences, HOA dues are not tax-deductible.

6. Home Improvements (capital improvements)

Most home repairs and cosmetic upgrades are not immediately deductible.

However, major renovations that increase your home’s value — known as capital improvements — raise your cost basis. A higher basis can reduce capital gains taxes when you sell.

Examples include:

• Adding a room
• Replacing the roof
• Installing central air
• Major kitchen or bath remodels

Because the rules are complex, consult a tax professional before starting a remodel for tax reasons.

7. Home Office Expenses

If you’re self-employed or a qualifying contractor, you may deduct home office expenses.

Two options:

• Actual expense method: Deduct a portion of utilities, repairs, insurance, etc., based on square footage.
• Simplified IRS method: Deduct $5 per square foot, up to 300 square feet (maximum $1,500).

To qualify:

• The space must be used regularly and exclusively for business.
• If you’re an employee, the workspace must be for your employer’s convenience.

8. Capital Gains Exclusion When You Sell

When you sell your primary residence, you may exclude capital gains if:

• The home was your primary residence.
• You lived there at least two of the last five years.

Current exclusion limits:

• $250,000 for single filers
• $500,000 for married couples filing jointly

Example: A married couple buys a home for $500,000 and sells it for $750,000. Their $250,000 gain falls entirely within the $500,000 exclusion — meaning no capital gains tax is owed.

Expired Energy Credits For 2026

Two popular energy credits are no longer available for property placed in service after December 31, 2025:

• Energy Efficient Home Improvement Credit (25C)
• Residential Clean Energy Credit (25D), including solar

These changes affect 2026 returns filed in 2027.

Don’t Let Taxes Drive The Decision

Tax breaks can help — but they shouldn’t be the main reason you buy a home. Lifestyle, family needs, and long-term goals matter far more. Think strategically and make the right life or business decision first. Then optimize for taxes — not the other way around.

Frequently Asked Questions

What tax deductions can homeowners claim? Mortgage interest (including PMI in 2026), home equity loan interest (if used to improve the home), property taxes, discount points, certain home office expenses, and capital improvements that reduce future capital gains.

Can you deduct household items? Generally no — unless tied to a qualified home office or casualty/theft loss.

What can new homeowners deduct? Mortgage interest, discount points, property taxes, qualifying improvements, and possibly home office expenses — if itemizing.

Can utilities be deducted? Only if you qualify for the home office deduction, and only the business-use portion.

Source: yahoo!finance