10 tax deductions most homeowners forget to claim
Most homeowners rush through their taxes every spring, not realizing they’re leaving hundreds or even thousands of dollars sitting on the table.
Owning a home is the American Dream, but it often comes with a nightmare of expenses that can drain your bank account faster than a leaky faucet. However, tax season offers a silver lining if you know where to look for savings. Many folks leave money on the table simply because they assume the standard deduction is their only option.
You might be sitting on a goldmine of write-offs that could significantly lower your bill or boost your refund this year. It pays to dig a little deeper into the tax code to find those hidden gems. From energy upgrades to home office use, the opportunities to save are vast and often overlooked.
Mortgage Interest Deduction
This is the big one that everyone knows about, but few realize the specific limits that apply to their situation. For homes bought after 2017, you can deduct interest on up to $750,000 of mortgage debt. It is a massive perk for those carrying a large loan balance.
Don’t assume you cannot claim this just because you refinanced or have a second mortgage on a vacation property. If you itemize, this single write-off can often outweigh the standard deduction. It is worth noting that for tax year 2023, only about 9% of taxpayers itemized, meaning most missed out on this.
State And Local Property Taxes
Your yearly property tax bill might make you wince, but it can also provide some sweet relief when you file your return. You can deduct up to $10,000 in combined state and local taxes, including property taxes. This cap includes income taxes or sales taxes, so you have to do the math carefully.
Many homeowners forget that this applies to any real estate they own, not just their main residence. Even a plot of land you are holding onto for the future counts toward this limit. NAR data shows the average property tax deduction in recent years was just under $6,300, which is a significant chunk of change.
Mortgage Discount Points
When you bought your house, you might have paid “points” to lower your interest rate and get a better monthly payment. These prepaid interest fees are generally deductible in the year you paid them. It is a detail that often gets lost in the mountain of paperwork at closing.
If you refinanced, you usually have to spread this deduction out over the life of the new loan rather than taking it all at once. Checking your closing disclosure statement can reveal hundreds or thousands of dollars in deductible points. It is like finding a forgotten twenty-dollar bill in an old pair of jeans.
Home Office Expenses
Working from home has become the new normal for millions, yet many are scared to claim this valid deduction. If you are self-employed and use a space exclusively for business, you can write it off. This includes a portion of your utilities, insurance, and repairs based on the size of your office.
The IRS offers a simplified method that avoids complex calculations and record-keeping headaches. This simplified option allows you to deduct $5 per square foot for up to 300 square feet. It makes the process painless and less likely to trigger any unwanted attention from the tax man.
Energy Efficient Upgrades
Going green does more than just help the planet; it puts some serious green back in your wallet. You can claim credits for installing solar panels, wind turbines, or geothermal heat pumps. These aren’t just deductions; they are credits that lower your tax bill dollar-for-dollar.
The government is really pushing for these improvements, so the incentives are stronger than ever right now. In 2023 alone, the average credit per recipient for these home improvements was $882. That is a solid return on investment for making your house more comfortable.
Medically Necessary Home Improvements
If you installed a ramp, widened doorways, or added handrails for medical reasons, those costs might be deductible. These expenses can be claimed as medical expenses if they exceed 7.5% of your adjusted gross income. It is a high bar to clear, but for major renovations, it is possible.
The key is that the improvement must be medically necessary for you, your spouse, or a dependent. You can only deduct the amount that exceeds the increase in your home’s value. It is a compassionate part of the tax code that helps families adapt to health challenges.
Home Equity Loan Interest
You can still deduct interest on a home equity loan or line of credit, but there is a catch you need to know. The funds must be used to buy, build, or substantially improve the home that secures the loan. You can no longer deduct the interest if you used the cash to pay off credit cards or buy a car.
This restriction was a major change in recent years that caught many borrowers off guard. Keep good records of how you spent the loan proceeds to prove eligibility. It is a smart way to maximize your refund if you have been renovating your kitchen or adding a bathroom.
Capital Gains Exclusion
Selling your home for a profit is great news, and the tax man might not touch a dime of it. You can exclude up to $250,000 of profit from capital gains tax if you are single. For married couples, that exclusion doubles to a massive $500,000.
To qualify, you must have lived in the home as your primary residence for two of the last five years. This is arguably the most valuable tax break available to American homeowners. It allows you to build wealth through real estate without getting hammered by taxes when you sell.
Moving Expenses For Military
Most people can no longer deduct moving expenses, but there is an important exception for our service members. Active-duty military personnel who move pursuant to a military order can still claim these costs. This includes the cost of moving household goods and travel expenses to the new location.
It is a small but vital benefit for those who serve and frequently relocate. You do not even need to itemize to claim this specific deduction. It recognizes the sacrifices made by military families who are constantly on the move.
Disaster Casualty Losses
If your home was damaged by a federally declared disaster, you might be able to find some tax relief. You can claim a deduction for financial losses not covered by your insurance. This applies to events like hurricanes, wildfires, and floods that have been officially designated by the government.
With the standard deduction for 2026 rising to $32,200 for married couples, only major losses usually qualify. Despite the high threshold, it provides a safety net when tragedy strikes your property. It is a deduction you hope to never use, but it is there when you need it most.
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