You don’t buy a house for the tax deductions. They’re just a nice side benefit — and usually very much appreciated, considering all the extra expenses associated with homeownership.
Here are eight tax breaks for homeowners you’ll want to know about, updated for the 2026 tax year and reflecting changes from the One Big Beautiful Bill. Remember, these guidelines apply to the 2026 tax year, which you will file in 2027.
Private mortgage insurance (PMI) payments will also be allowed in 2026 as deductible mortgage interest (but not for 2025 returns).
You’ll still want to consider whether taking the income tax deduction for mortgage interest — along with other deductions — exceeds the standard deduction. To deduct any specific expenses related to your home, you’ll have to opt for itemized deductions.
Read more: Standard deduction vs. itemized: Which tax filing approach is best for you?
However, fewer homeowners are expected to itemize taxes in 2026 because of the high standard-deduction amounts:
Taxpayers over 65 have a new deduction through tax year 2028: an extra $6,000 for single filers; $12,000 for a married couple. The deduction phases out on income over $75,000 ($150,000 for joint filers).
“If [homeowners] have a medical event and were in the hospital for three or four months. Or they’ve given a significant amount of donations — all of those things fall into those itemized categories. Mortgage interest is a component of it,” John G. Adams, a CPA in Jupiter, Fla., told Yahoo Finance over the phone.
Home equity loans and lines of credit can be invaluable tools to convert a portion of an illiquid asset (your home) into cash.
And they can provide another tax break.
While the guidelines were initially going to be relaxed, the OBBB maintains that for HELs and HELOCs to be tax deductible in 2026 the proceeds must still be used to buy or improve your home. There are other restrictions too. One important consideration: Interest deductions are allowed on up to $750,000 of home loan debt, including first and second mortgages. If you are married and file your taxes separately, that drops to $375,000.
This is another tax break that you must itemize to receive.
Dig deeper: Is interest paid on a HELOC tax deductible?
Mortgage discount points reduce your mortgage interest rate — and discount points can be tax deductible (if you itemize your tax return).
Adams said that by paying a bit of interest up front, you pay less interest over the remaining years of your mortgage. Roughly, for each 1% discount point, your mortgage rate is lowered by a quarter point. For example, on a $400,000 mortgage, you might pay $4,000 to lower your rate from 7% to 6.75%. Points can be purchased in fractions as well.
“Just keep in mind that points are not financially smart unless you plan to live in your house at least five years before selling it, and most homeowners relocate before that,” Crystal Stranger, an enrolled agent and tax educator in Boulder, Colo., told Yahoo Finance.
Property taxes — in jurisdictions where they are collected — fund many of the services and infrastructure where you live. And they can be an income tax deduction, along with other state and local taxes.
The so-called SALT (state and local taxes deduction) has been raised to $40,000 from the former $10,000 limit.
“This is great news for homeowners who pay high property taxes, such as those in New York or Texas,” said Stranger. “However, this is reduced for taxpayers who earn over $500,000. Earning more than that amount can actually have a more than dollar loss in credits and deductions for each increased dollar in income.”
As with all of these other tax breaks, you’ll have to itemize your tax return and comply with appropriate limits.
Now, we’re trimming the tax deductions down to a thin slice. Homeowners’ association fees are about as close as you can get to a nuisance fee in the owning-a-home scenario. They are also not generally tax deductible.
There are exceptions — but don’t hold your breath. You may be able to write off some or all of your HOA fees on an investment property, a house you use as an occasional rental, or a home office.
Many people are keeping their homes longer, so renovations and upgrades are popular. However, the tax advantage of such home improvements is often a long-term proposition and not a deduction taken on next year’s tax return.
The tax break is not allowed for minor cosmetic touches, maintenance, or repairs; it’s only for meaningful updates that increase your home’s market value. Called “capital improvements,” these significant upgrades increase your cost basis — the amount you paid for the home. That, in turn, may reduce the capital gains taxes you pay when you sell the house.
If tax deductions are a driving factor behind your home remodel, you may want to contact a tax professional before diving in — this type of tax break has a lot of fine print and red tape.
Working from home can have its benefits. But a tax break? Yeah, sometimes.
“If you use your house for business, it opens the door to significantly more deductions being available, including a portion of repairs, utilities, etc.,” noted Stranger.
You can calculate the square footage of your workspace or, for the careful recordkeepers, itemize your actual work-related expenses. “You can also take the IRS-simplified method, allowing a deduction of $5 per square foot of home office space, up to a maximum of 300 square feet, meaning $1,500 in deduction,” Stranger added.
The catch: To get the tax write-off, you’ll generally need to be self-employed, a contracted freelancer, or if you’re an employee, the use of the home for work “must be for the convenience of your employer,” the IRS says. And you’ll need a dedicated workspace.
Learn more: How does the home office deduction work?
The profit on the sale of a house is called a capital gain. You can avoid paying real estate capital gains tax on some or all of that sum under two conditions:
The house has been your primary residence.
You’ve lived in the home for at least two of the past five years.
Currently, the IRS allows a homeowner’s exclusion for the first $250,000 profit on the sale of a primary residence. That increases to $500,000 for a married couple. For example:
A married couple who file their taxes jointly sells their home for $750,000. Assuming they paid $500,000 for the house, with the capital gains exclusion, they will owe no capital gains taxes.
$750,000 sales price – $500,000 cost basis = $250,000 (- $500,000 exclusion = $0 capital gain)
“Most homeowners I’ve seen who resell their house within two years have a small loss or break-even on the sale,” Stranger said. “Capital gains taxes rarely are an issue for homeowners selling their primary residence.”
Dig deeper: Can you get a tax break for selling your house at a loss?
Crystal Stranger noted that the Energy Efficient Home Improvement Credit (25C) and Residential Clean Energy Credit (25D) for solar panels are not allowed for property placed in service after Dec. 31, 2025.
Remember, these are related to 2026 returns that are filed in 2027.
With all the tax advantages duly considered, it’s worthy to note that you’re buying a house for lifestyle reasons: Your family is growing, you’re moving closer to your job or loved ones, or you simply want a place of your own.
You’re not buying a house for the tax benefits. Adams said that would be a “tail wagging the dog” sort of decision.
“You should always be thinking strategically — first about your family or your business life, and then taxes should be a part of it, but it really shouldn’t be the deciding factor of why you do stuff,” he added.
Learn more: Best tax deductions to claim this year
As noted above, the most likely deductions include the interest you pay on your mortgage loan and, in some instances, the interest on HELOCs and HELs. Property, state, and local real estate taxes might also be written off. Prepaid interest, called discount points, can be a deduction. And, sometimes, home office expenses and significant improvements to a house can provide a tax break. However, with higher standard deductions in 2026, fewer homeowners may itemize.
If you have a home office, you may be able to take a deduction on a portion of work-related expenses. Or you can take a write-off based on an IRS deduction rate multiplied by the square footage of your dedicated workspace. You can also deduct losses from disasters and theft.
New homeowners can write off mortgage interest, discount points, property taxes, major home upgrades, and home office expenses — if they itemize.
If you have a home office and are not a full-time remote employee, you might be eligible to deduct a portion of the amount you paid for utilities based on the square footage of your workspace up to a maximum limit.
