11 tax deductions for homeowners

Homeownership is expensive, but there is some relief when it comes to your taxes. A number of regular home expenses and improvement costs can qualify you for federal tax deductions. Not everyone will qualify for these deductions since you need to itemize in order to claim most of them, but any homeowner could potentially ease their tax burden with these write-offs.

11 tax deductions for homeowners in 2023

For your 2022 taxes, which you file in early 2023, there are a number of deductions available to homeowners. However, most of these deductions are only available if you itemize deductions. While many homeowners may be able to itemize, for around 90% of all tax filers it’s worth more to claim the standard deduction than to itemize.

Here are some of the most common expenses homeowners can deduct for 2022 taxes:

• Mortgage interest
• Mortgage points
• Home equity loan interest
• Property taxes
• Capital gains for a home sale
• The home office deduction
• Rental expenses
• Accessibility improvement costs
• Energy efficient home improvement credit
• Residential energy efficient property credit
• Casualty and theft losses from a federally declared disaster

Mortgage interest

The mortgage interest deduction allows homeowners who itemize their expenses to deduct some or all of their mortgage interest. For mortgages that started on Dec. 16, 2017, or more recently, you can deduct mortgage interest on the first $750,000 of your loan. Mortgages that started before December 2017 have higher limits, with interest on the first $1 million of a mortgage being deductible. Check your mortgage interest on the Form 1098 from your lender. When filing, use Form 1040 Schedule A to itemize.

Mortgage points

If you have a mortgage term that’s 30 years or shorter, mortgage points are usually deductible along with the rest of your mortgage insurance. The IRS treats points like prepaid interest that you pay ahead of time. You can’t deduct all of your mortgage points at once though. You’ll need to spread out and deduct the value of your points over the course of mortgage.

Home equity loan interest

Much like other mortgage interest, you can deduct interest from a home equity loan if you itemize deductions. However, since the Tax Cuts and Jobs Act of 2017, you can only deduct the interest if you used the loan to “buy, build, or substantially improve your home.” If you used some of the loan for home improvements, then only some of the interest is deductible. Deduct eligible interest alongside other mortgage interest on Form 1040 Schedule A.

Property taxes

If you itemize, you can deduct the property taxes you paid in 2022 along with other state and local taxes. But there is a limit to how much you can deduct. Since the Tax Cuts and Jobs Act of 2017, you can only deduct up to a maximum of $10,000 of the state and local taxes you paid. To learn more, check the instructions for Form 1040 Schedule A. If you paid property taxes in 2022 but also sold your house, you should get those payments refunded to you (check box 6 of any Form 1099-S you received) and you’ll have to decrease your property tax deduction by the amount of the refund.

→ Learn more about property tax deductions

Capital gains for a home sale

Any money you made from selling your home in 2022 qualifies as capital gains, but you can avoid tax on some or all of that money. The home sale exclusion allows married couples to deduct up to $500,000 of gains from a home sale. Single tax filers to deduct up to $250,000. To qualify you must be the legal owner of the house and you need to have lived in it for at least two years out of the five years prior to the home’s sale date. To claim the home exclusion, which the IRS officially calls the Section 121 exclusion, you’ll need to use Form 8949 and Form 1040 Schedule D.

→ Learn more about the tax implications of selling a house

Home office deduction

The IRS allows you to deduct the cost of maintaining a home office on your 2022 taxes. The key is that you can only qualify if you have a space in your house that’s used exclusively for business or work, and it’s your primary work space. Your home office could be a whole room but it could also be as small as a desk in the corner of your living room. An area can also qualify as a home office whether you use it for yourself, as a space to store inventory, or to meet with clients. Your home office doesn’t qualify if you go into an office as your primary work environment, but also work from home some of the time.

If you have a qualifying home office, you can deduct the portion of your home expenses that would be necessary to maintain your office. Eligible expenses include utilities, security systems, and repairs. To claim the home office deduction, complete Form 8829 and Form 1040 Schedule C.

→ Learn more about home office deductions

Rental expenses

If you rent out all or part of your home, including through services like Airbnb, you may be able to deduct maintenance and repair expenses associated with your rental property. Whether or not your home qualifies depends on how often you rent out the space versus how long you live in that space. Some expenses that you can deduct for a rental property include utilities, security equipment, repair costs, home insurance, mortgage interest, and management fees. Expenses that are necessary to improve accessibility for people with disabilities can also qualify. If you only rent out part of your home — such as a spare room, garage, or in-law apartment — your eligible deduction is the portion of your costs and expenses that cover the rented portion of your home. To claim this deduction, you’ll need to fill out Form 1040 Schedule E. You don’t need to itemize for this deduction.

→ Learn more about second home tax deductions

Accessibility improvement costs

For homeowners with disabilities, the cost of home improvements that are necessary to make your home more accessible can qualify you for a deduction. Most expenses can qualify if their primary purpose is to make your home more accessible to you, your spouse, or one of your dependents. Some examples of deductible costs are the building entrance and exit ramps, widening doorways, installing railing or supports, modifying kitchen cabinets or equipment, changing hardware on doors, installing lifts, and modifying staircases.

For home improvements that increase the value of your home, like if you install elevators, the IRS will decrease your possible deduction by the increased home value. Unfortunately, you must itemize to claim this deduction so be sure to keep all receipts. Learn more in IRS Publication 502.

Energy efficient home improvement credit

Improvements you make to increase the energy efficiency of your home can qualify for this credit. Examples of eligible home improvements include adding insulation to reduce heat loss and updating to more efficient heating or cooling systems. Certain other improvements also qualify. For example, adding exterior doors, exterior windows, or skylights, can qualify for the deduction if they meet energy efficient standards. To learn more or claim this tax credit, use Form 5695 and Form 1040 Schedule 3. Some taxpayers may also receive state tax credits for energy efficiency improvements.

Residential energy efficient property credit

Installing renewable energy systems can qualify you for a tax credit on your 2022 taxes. Eligible installation expenses include solar panels, solar hot water heaters, geothermal heat pumps, fuel cell, biomass fuels like wood chips or pellets, and wind turbines or other wind energy technology. Claim the credit by completing Form 5695 and Form 1040 Schedule 3. Depending on where you live, you may also be eligible for state or local tax credits for energy efficient improvements.

→ Read more about claiming residential energy credits

Casualty and theft losses from a federally declared disaster

You can’t deduct property losses on your taxes unless they occurred in a federally declared disaster. In that case, the deduction is available for your home, vehicles, and personal property. You can only deduct the value of your property that isn’t covered by other insurance policies, but you can qualify whether the property was damaged, destroyed, or stolen. Unfortunately, you can only claim this deduction if you itemize. To claim the deduction, use IRS Form 4684 and use Form 1040 Schedule A to itemize.

10 homeowner costs that aren’t deductible

Unfortunately, most of the costs that homeowners pay aren’t deductible on their federal taxes. State tax codes vary, but you should expect that the following costs aren’t deductible on your state taxes either.

• Accrued interest on a reverse mortgage: While you can deduct interest from a reverse mortgage, you can only deduct it after you have fully paid off the loan.
• Closing costs: The exact closing costs you pay vary, but don’t expect them to be deductible.
• Depreciation: The average homeowner can’t deduct the depreciation of their home or property. There is an exception for some business situations.
• Down payment costs: No matter the type or size of your mortgage loan, it won’t be deductible.
• Homeowner association fees: HOA fees, condo association fees, and co-op fees aren’t deductible.
• Insurance premiums: Most homeowners can’t deduct home insurance premiums. Other types of insurance, like fire or flood insurance, also aren’t deductible.
• Mortgage insurance premiums: PMI payments used to be deductible but the deduction expired at the end of 2021 and isn’t available for the 2022 tax year.
• Mortgage payments: You can’t deduct the principal payments on a mortgage.
• Rent: You can’t deduct your rent in most cases, even if you rent out a full house or if you buy the house and are renting it before you officially close on it. One possible exception is if you use the home as a place business, including as a home office.
• Utilities: Monthly utilities, including electricity, gas, internet, water, and waste removal, aren’t deductible on your federal taxes unless you use your home for business.

Are home improvements tax-deductible in 2023?

Some home improvements are deductible on your tax return. Most commonly, improvements you make to improve energy efficiency are eligible for a tax credit. As explained earlier in this article, adding renewable energy (such as solar panels) and updating existing parts of your home (like replacing old windows with energy efficient versions) can qualify. You don’t need to itemize and since these are credits instead of deductions, they directly decrease how much tax you owe (credits only decrease how much of your income ends up getting taxed).

Medically necessary improvements can qualify you for an itemized deduction. Expenses must be made for the primary reason of making your home more accessible for you, your spouse, or your dependent. Improvements that increase the overall value of your home may not be fully deductible. The IRS will lower your deduction by the increase in home value.

Improvements that you make in order to maintain a rental space can also qualify for a deduction. Since the IRS treats rental property as business income, you may also open up possible business deductions for certain improvements.

→ Read more about deductible home improvements and how to claim them

It’s also important to remember that state tax codes may offer deductions and credits that go beyond federal credits. The information above applies to every homeowner who files a 2022 federal tax return, but you should check your state’s rules to see if there are any additional tax write-offs available.

FAQs

Let’s look over some of the most frequently asked questions when it comes to homeowner tax deductions.

What can you write off as a homeowner?

Homeowners can write off mortgage interest and points, property taxes, sustainable and accessible home improvements, and losses from a federal disaster on their taxes. The costs of maintaining a home office or rental home may also be deductible.

What homeownership expenses are tax-deductible?

Certain costs of homeownership, like property taxes, are tax-deductible but many others, like insurance and maintenance are not.

How do I file taxes if I own a house?

Homeowners and renters can file taxes in primarily the same way using Form 1040 and attaching Schedule A for any itemized deductions, including those for home-related expenses.