Homeowner Tax Advantages for 2025

Tax deductions for homeowners can add up to many thousands of dollars. But in order to claim every last deduction, it is necessary to itemize your deductions. Usually, the standard homeowner deduction offered by the Internal Revenue Service (IRS) is a higher amount. Therefore, most homeowners settle for the standard deduction. In short: Only itemize/claim your deductions if they exceed the standard deduction.

The standard deduction is a specific dollar figure you can subtract from your adjusted gross income on your federal taxes. The deduction, set each year by the IRS, varies based on your tax-filing status.

The standard deduction for the 2024 tax year (for taxes due in April 2025) is:

$29,200 for married couples filing jointly
$14,600 for single filers and married people filing separately
$21,000 for heads of households

If you should decide to itemize it is imperative to keep careful records in case of an audit.

Here are the deductions that can be itemized to reduce your tax bill:

Mortgage interest. You can deduct the interest you paid depending on when you took out the mortgage. If you took out your mortgage on 12/16/17 or later, you could deduct the interest on up to $750,000 of mortgage debt (or up to $375,000 if you're married and filing separately).
If you took out your mortgage on Oct. 14, 1987, through Dec. 15, 2017: You can deduct the interest on up to $1 million of mortgage debt ($500,000 if married and filing separately).
If you took out your mortgage on Oct. 13, 1987, or before: You can deduct all the mortgage interest.

Also, you can deduct home equity loan interest and home equity lines of credit, but only if you borrowed the money on home improvements. But there is a caveat: Your home equity loan counts toward the total mortgage debt limit for deducting interest. Therefore, if your first mortgage is over the deductible limit, then the home equity loan interest won't be deductible.

Discount points are deductible. These are the fees you pay when your mortgage closes to lower your interest rate. One discount point costs one percent of the mortgage amount. But in most situations, you can't deduct the full amount in the year they were paid. Instead, you can deduct a portion of them each year over the life of the loan. There are exceptions, however. Consult your accountant about this. Also, the term “points” can be confused with “origination points” which are the fees the lender might charge for their services. These are not deductible. Again, consult your accountant about this.

Property taxes in combination with state and local income tax are deductible to a limit. You can deduct $10,000 ($5,000 if married and filing separately).

You may deduct home office expenses if you’re self-employed and use part of your home for business. The IRS website offers details about this deduction.

Altering your home for medical reasons can be deductible (installing medical equipment, making a home more accessible for a medically impaired person, installing railings, and support bars).