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Tax season is here, and as accountants and tax lawyers gear up for their busiest time of the year, many Americans are looking at how they can use their homes to their advantage when it comes to taxes.
Owning a home isn’t just about building equity — it’s also a chance to cash in on some serious tax breaks.
Homeowners are eligible for a series of tax deductions, ‘an amount you subtract from your income when you file,’ per the IRS.
But there’s a limited window to take advantage of these carveouts.
The 2024 tax filing season began on January 27, and taxpayers who don’t file for an extension have until April 15 to submit their returns.
From mortgage interest to medical home improvements, the right deductions can add up fast. Here’s what’s on the table, as compiled by Realtor.com.
1.Interest on the mortgage
One of the most popular tax perks for homeowners is the mortgage interest deduction.
Homeowners in America may be eligible for a list of deductions on their 2024 taxes
The Internal Revenue Service (IRS) permits deductions on the interest paid for the first $750,000 of a mortgage. For married individuals filing separately, this deduction is halved to $375,000.
Loans taken out before December 16, 2017, qualify for a higher cap of $1 million.
2. Property taxes
Homeowners can deduct local property taxes from their federal taxes — but there’s a catch.
Property taxes are deductible only up to a combined $10,000 limit, which includes state and local taxes (SALT).
In high-tax states, many homeowners hit the SALT cap before they can fully apply their property tax deduction.
3. In-home offices
Taxpayers working from home might also be eligible for a big deduction.
The deductions could save homeowners hundreds – if not thousands
Most home deductions are geared toward recent home buyers
If a home office is used solely and on a regular basis for business purposes, the IRS allows deductions for a portion of housing costs, which can include utilities and repairs.
At-home employees may even be able to deduct their home office’s size. The simplified deduction caps at 300 square feet.
Self-employed individuals, gig workers, and independent contractors stand to benefit the most.
Employees who work from home may also be able to write off the space as a percentage of their home, but the IRS is strict on these claims, so keeping records is key.
4. Energy efficiency credits
Homeowners may be eligible for state and federal tax reductions if they switch to green methods of energy production.
Solar panels, energy-efficient HVAC systems, and geothermal heating often come with state and federal tax credits.
Unlike deductions, which lower taxable income, credits directly reduce the amount of tax owed, making them especially valuable.
5. HOA fees
A growing number of Americans are paying Homeowners Association (HOA) fees.
Around 35 percent of Americans reported paying an average of $3,500 in HOAs, according to DoorLoop.
HOAs aren’t usually deductible — but homeowners who use private residences as a rental or for business purposes may be able to deduct the fee.
Like the home office deduction, the federal government classifies HOA fees for a rental or office space as business investment.
6. Expenses in the home
Home-related expenses like mortgage interest, utilities, and maintenance can be deducted—but only for those using a part of their home exclusively for business.
Similar to HOA fee and at-home office deductions, this perk applies to self-employed individuals, not W-2 employees.
7. Medically-necessary changes
Home accessibility modifications may qualify as a medical expense deduction, if they’re deemed medically necessary.
The IRS requires submitted documentation to prove that a resident in the home needs the equipment to live in the home.
