Available Tax Benefits for Homeowners

With the year nearly half over, now may be a good time for homeowners and prospective buyers to review the tax benefits associated with homeownership. Depending on a taxpayer’s situation, certain deductions or credits may help offset some of the ongoing costs of owning a home.

Some Homeownership Expenses May Be Deductible

Taxpayers who want to deduct eligible homeownership expenses must itemize deductions on their federal tax return. Because of that, not every homeowner will benefit from claiming these deductions.

For many homeowners, mortgage payments include more than just principal and interest. Lenders may also collect amounts for property taxes and other housing-related costs. However, only certain expenses may qualify for a deduction.

Homeowners may be able to deduct:

• State and local real estate taxes, subject to a $40,000 limit, or $20,000 if married filing separately
• Home mortgage interest, within applicable IRS limits

Expenses Homeowners Generally Cannot Deduct

While some housing costs may be deductible, many common homeownership expenses are not. Homeowners generally cannot deduct:

• Homeowners insurance, including fire, comprehensive, or title insurance
• Mortgage principal payments
• Wages paid to domestic help
• Depreciation
• Utility costs such as gas, electricity, or water
• Most settlement or closing costs
• Forfeited deposits, down payments, or earnest money
• Internet or Wi-Fi service
• Homeowners’ association fees, condominium association fees, or common charges
• Home repairs

Understanding the difference between deductible and nondeductible costs can help homeowners avoid mistakes when preparing a return.

The Mortgage Interest Credit May Help Certain Homeowners

Some lower-income homeowners may qualify for the Mortgage Interest Credit, which can provide a tax credit for part of the mortgage interest paid during the year.

This credit is generally available only to taxpayers who were issued a qualified Mortgage Credit Certificate by a state or local government agency. Eligible homeowners may be able to claim the credit annually, depending on their circumstances.

Special Rules May Apply to Housing Allowances

Certain taxpayers who receive a nontaxable housing allowance may still be able to deduct qualifying housing-related expenses.

This can apply to:

• Ministers
• Members of the uniformed services

If eligible, these individuals may still deduct real estate taxes and home mortgage interest without reducing those deductions because of the housing allowance.

Reviewing Homeownership Tax Benefits Can Help Taxpayers Plan Ahead

Homeownership comes with a wide range of costs, and not all of them receive favorable tax treatment. Reviewing potential deductions and credits before year-end can help taxpayers better understand what may apply to their situation and avoid overlooking valuable opportunities.

If you have questions about which homeownership-related tax benefits may apply to you, Porte Brown’s tax professionals can help you evaluate your options and plan with greater confidence.

Source: IRS Tax Tip 2026-42