Guide to Tax Deductions for Homeowners in 2026

Owning a home comes with costs, but it also provides tax benefits that can lower your taxable income. For those filing taxes in 2026, deductions like mortgage interest and home office expenses have become more relevant with the rise of remote work. Some tax benefits have been long established, while others now apply to changing work situations. Knowing which deductions you qualify for can help maximize savings.

A financial advisor can provide personalized guidance on eligible deductions and tax compliance for your upcoming tax return.

Tax Deductions for Homeowners in 2026

Tax deductions can help homeowners offset some of the costs of property ownership, potentially leading to substantial savings. These deductions apply to mortgage-related expenses, home improvements and certain state and local tax (SALT) payments.

While many deductions remain the same year over year, recent legislative changes could impact eligibility or deduction limits in 2026. These are six common homeowner tax deductions to note.

Discount Points

Mortgage discount points are fees paid to lenders at closing for the purpose of reducing a loan’s interest rate.

The IRS allows the deduction of discount points on a primary residence, provided that the mortgage meets specific requirements:

Points paid on a home purchase loan are fully deductible in the year of payment if treated as prepaid interest.
If refinancing a mortgage, discount points must be deducted over the life of the loan rather than in a single year.

The deduction is only available for points paid on a primary residence, not on investment properties or rental properties.

Property Taxes

Homeowners can deduct state and local property taxes (SALT) they pay each year. However, this deduction falls under the SALT cap, which limits total deductions for state and local taxes, including property and income taxes. The cap is $40,000, up from the previous $10,000 cap.

This deduction is available for property taxes paid on a primary or secondary home but not on rental properties, which instead fall under business deductions. Taxes paid through an escrow account are deductible when actually paid to the tax authority, not when deposited into escrow.

Mortgage Interest

One of the most valuable tax deductions for homeowners is the mortgage interest deduction, which applies to interest paid on a qualified home loan.

The deduction is available for mortgage loans of up to $750,000 for single filers and married couples filing jointly, or $375,000 for married individuals filing separately.
Homeowners who purchased their home before December 15, 2017, can deduct interest on mortgage loans up to $1 million ($500,000 if married separately).

This deduction applies to primary and secondary residences but not investment properties.

Home Equity Loan and HELOC Interest

Interest paid on a home equity loan or home equity line of credit (HELOC) may be tax-deductible if the loan is used to buy, build or substantially improve the home.

Homeowners can deduct interest on total combined mortgage debt, including primary mortgage and HELOC, up to $750,000.
If the HELOC funds are used for personal expenses, such as paying off credit card debt, the interest is not deductible.

Necessary Home Improvements

Certain home improvements qualify for tax deductions if they increase the home’s value or improve accessibility for medical reasons.

Necessary home improvements can include the following:

Improvements made for medical necessity, such as installing wheelchair ramps or modifying bathrooms for disability access, may qualify as medical expense deductions if they exceed 7.5% of adjusted gross income (AGI).
Energy-efficient home upgrades, including solar panels, energy-efficient windows or HVAC systems, may qualify for federal tax credits, reducing the tax owed rather than providing a deduction.

Home Office Expenses

Homeowners who use part of their home exclusively and regularly for business purposes may qualify for the home office deduction.

The deduction applies only to self-employed individuals or business owners. Employees working remotely for an employer do not qualify.
The simplified deduction method allows a deduction of $5 per square foot of office space, up to 300 square feet.
The actual expense method requires tracking home office costs, including rent or mortgage interest, utilities and home depreciation, but often results in a larger deduction. However, be sure to note that depreciation is subject to recapture tax when the property is sold.

Home Expenses That Are Not Tax Deductible

While homeowners can benefit from several tax deductions, some common home expenses do not qualify for tax relief.

Homeowners insurance premiums are not tax-deductible, as they are considered personal expenses.
Mortgage principal payments are not deductible, while mortgage interest is.
Homeowners association (HOA) fees are generally not deductible unless the property is used for rental or business purposes.
Title insurance costs when purchasing a home are not deductible.
Routine home repairs, such as fixing a leaky roof or replacing appliances, are not deductible unless they qualify as necessary home improvements that add long-term value.

How to Deduct Expenses on Your Tax Return

Homeowners who qualify for tax deductions must itemize deductions rather than take the standard deduction to claim them. Here are five steps to deduct homeowner expenses on a tax return.

1. Determine Whether Itemizing Deductions Is Beneficial

The standard deduction for 2026 is $16,100 for single filers and $32,000 for married couples filing jointly. Heads of household have a $24,150 deduction.
If total deductions exceed this amount, itemizing deductions may provide greater tax savings.

2. Gather Documentation

Keep records of mortgage interest statements, property tax payments and receipts for qualifying home improvements.
Retain copies of closing statements for mortgage discount points and home equity loan documentation.

3. Complete Schedule A on Form 1040

Report deductions, such as mortgage interest, property taxes and home improvements for medical expenses, on Schedule A of Form 1040.

4. Complete Form 8829 and Schedule C on Form 1040

Report home office expenses on Form 8829, which flows to Schedule C of Form 1040.

5. File Your Tax Return Electronically or by Mail

Homeowners can file by using IRS Free File, tax software like TurboTax or H&R Block, or through a tax professional.
If deductions are complex, working with a tax advisor or CPA can help avoid errors and maximize savings.

How to Time Homeowner Deductions

When it comes to homeowner tax deductions, timing matters.

Most deductions are based on when you actually paid an expense, not when the bill was issued or when the cost showed up on a statement. Claiming a deduction in the wrong year is one of the most common filing mistakes homeowners make.

Mortgage interest and property taxes are deductible only in the year the payment is sent to the lender or tax authority. If you pay property taxes through an escrow account, you cannot deduct the amount when it is deposited into escrow. You can only deduct the amount once the lender pays the tax bill on your behalf. This can shift deductions into a different tax year than many homeowners expect.

Closing costs also follow specific timing rules. Mortgage interest paid at closing is generally deductible in the year you buy the home, even though it covers only part of a month.

Property taxes paid at closing are deductible only for the portion assigned to you as the buyer. Discount points paid on a home purchase are usually deductible in the year you pay them, while points paid on a refinance must be deducted gradually over the life of the loan.

Home office deductions apply only to periods when the space was used exclusively and regularly for business. If you start using a home office partway through the year, only expenses tied to that timeframe qualify. Depreciation claimed for a home office also affects future taxes, since it must be recaptured when the home is sold.

For home improvements, timing depends on the type of benefit. Medical-related improvements are deductible only in the year they are completed and paid for. Meanwhile, energy-efficient upgrades qualify for tax credits in the year the system or equipment is placed into service, not when you sign a contract or finance the work.

Paying attention to when expenses are actually paid helps avoid lost tax deductions and filing corrections later. For homeowners, timing can be just as important as the deduction itself.

Bottom Line

Owning a home provides several valuable tax deductions, but eligibility depends on income limits, funds usage and tax law changes. Mortgage interest, property taxes and home equity loan interest remain key deductions, while home office expenses and necessary home improvements may also provide tax benefits.

Tax Planning Tips

If you’re looking for ways to lower your tax liability, a financial advisor who specializes in tax planning can help optimize your finances. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you want to know how much your next tax refund or balance could be, SmartAsset’s tax return calculator can help you get an estimate.