Owning a home comes with several tax benefits that renters do not get. Some deductions can save you thousands of dollars per year if you itemize. But the rules have specific limits and requirements, and not all home-related expenses are deductible. Here is a clear breakdown of what homeowners can deduct in 2026.
Should You Itemize or Take the Standard Deduction?
You can only use home-related deductions if you itemize deductions on Schedule A instead of taking the standard deduction. For 2026, the standard deduction is approximately:
- $15,000 for single filers
- $30,000 for married filing jointly
- $22,500 for head of household
If your total itemized deductions — including mortgage interest, property taxes, charitable contributions, and other eligible expenses — do not exceed your standard deduction, itemizing is not worth it. Many homeowners, particularly those with lower mortgage balances, are better off with the standard deduction.
Mortgage Interest Deduction
You can deduct interest paid on up to $750,000 of mortgage debt (for loans originated after December 15, 2017). If your mortgage was originated before that date, the limit is $1 million. This applies to your primary residence and one second home combined.
Your lender sends a Form 1098 each January showing total mortgage interest paid during the year. That amount goes on Schedule A. For most homeowners with newer mortgages, this is the largest deductible item by far — in early years of a mortgage, the majority of each payment is interest.
Property Tax Deduction
You can deduct state and local property taxes, but the total deduction for all state and local taxes (SALT) — including property taxes, state income taxes, and local taxes — is capped at $10,000 per year ($5,000 if married filing separately).
For homeowners in high-tax states like California, New York, or New Jersey, this cap often limits what they can actually deduct. Property taxes above the $10,000 SALT cap are not deductible.
Home Equity Loan and HELOC Interest
Interest on a home equity loan or HELOC is deductible only if the funds were used to “buy, build, or substantially improve” the home that secures the loan. The combined debt limit (mortgage + home equity) is still $750,000.
If you used your HELOC to pay off credit cards or buy a car, that interest is not deductible under current rules. Keep documentation showing how you used the funds in case of an IRS audit.
Mortgage Points
If you paid points at closing to lower your interest rate, those points may be deductible. Points on a purchase mortgage are generally fully deductible in the year paid, as long as the amount is typical for your area and was paid directly by the borrower.
Points on a refinance must be deducted over the life of the loan rather than all at once in the year of closing.
Home Office Deduction
If you are self-employed and use part of your home exclusively and regularly for business, you may be able to deduct home office expenses. This includes a proportional share of rent or mortgage interest, utilities, and insurance.
W-2 employees cannot take the home office deduction, even if they work from home full-time. It is only available for the self-employed.
The simplified method allows a $5 deduction per square foot of dedicated home office space, up to 300 square feet. The regular method requires calculating the actual percentage of your home used for business. The regular method is more complex but may yield a larger deduction.
What Is NOT Deductible
- Homeowner’s insurance premiums
- Utility bills (unless home office deduction applies)
- Most home repairs and maintenance costs
- Moving expenses (except for certain military members)
- Principal payments on your mortgage
- HOA fees
- Home purchase costs (closing costs, title insurance)
Capital Gains Exclusion When You Sell
This is not a deduction, but it is one of the biggest tax benefits homeowners receive. If you have lived in your home as your primary residence for at least 2 of the last 5 years, you can exclude up to $250,000 of capital gains from the sale ($500,000 if married filing jointly). This means many homeowners pay zero tax on appreciation when they sell.
Energy Efficiency Tax Credits
In 2026, homeowners can claim credits for qualifying home energy upgrades including heat pumps, insulation, windows, and solar panels. The Residential Clean Energy Credit covers 30% of the cost of solar, wind, battery storage, and other qualifying systems. The Energy Efficient Home Improvement Credit covers 30% of costs for qualifying improvements up to certain annual limits. These are credits, not deductions — they reduce your tax bill dollar for dollar.
Bottom Line
The mortgage interest and property tax deductions are the most valuable for most homeowners, but the SALT cap limits the property tax benefit for many. Run the numbers to see if itemizing beats the standard deduction for your situation — and if you made any energy-efficiency upgrades, make sure you are claiming the available credits. A tax professional can help you optimize these benefits if your situation is complex.