8 tax deductions for homeowners: Your breaks and benefits

It's no secret that homeownership is expensive. One factor that can make buying or owning a property more affordable is the availability of tax deductions for homeowners. Keep in mind that this isn’t personalized tax advice, and you should always consult a professional, but read on for a list of deductions commonly available to homeowners.

Standard vs. itemized deductions

When you prepare your income tax return, you have a choice between the standard deduction and itemized deductions. Most of the tax breaks available to homeowners require you to itemize your deductions.

Itemizing your deductions means that you calculate precisely how much money you spent on each thing that is eligible for a deduction, then subtract that amount from your income to determine your taxable income.

The standard deduction is a flat amount that you can deduct from your taxes without having to calculate specific expenses. That makes it much easier than itemizing.

The standard deduction depends on your filing status.

• Standard deduction for single filers and married individuals filing separately: $15,750
• Standard deduction for married couples filing jointly: $31,500
• Standard deduction for heads of households: $24,150

Both types of deductions reduce your taxable income, meaning you pay less tax. You typically can choose only one: itemizing or taking the standard deduction, so it’s only worth itemizing if your total itemized deductions exceed the standard deduction you’re eligible for.

8 tax deductions for homeowners

There are several tax breaks for homeowners, but these benefits come with rules and restrictions. We'll cover some of the significant tax benefits for homeeowners.

1. Mortgage interest

The mortgage interest deduction allows you to deduct the cost of interest for mortgages used to buy, build, or substantially improve a home. When you first take out a mortgage, most of what you pay your lender is home mortgage interest, and that amount is deductible. This rule applies to all primary mortgages. It applies to second mortgages only if the money you borrow is used for specific purposes.

Deductions are only allowed on up to the first $750,000 of mortgage debt for most filers, half that if you’re married filing separately.

2. Home equity loan or HELOC interest

A home equity loan is a type of loan secured by the equity you've built in your home. It's often referred to as a second mortgage. Home equity lines of credit also are secured by equity, but are you borrow money as needed up to a maximum amount. Rocket Mortgage® doesn't currently offer HELOCs.

You can deduct the interest you pay on these loans, but there are some additional rules beyond the $750,000 balance limit, which is a total loan limit across all your mortgages.

For loans issued before 2017, any home equity loan or HELOC is eligible for this deduction. For loans taken out since 2017, you can only deduct interest if the loan was used to “buy, build, or substantially improve” the home securing the loan.

Rules are set to change again, so that starting in 2026, there will be no limit on the purpose of the loan, although the $750,000 limit will remain.

3. Discount points

Discount points, also known as mortgage points, allow you to prepay a portion of the interest on your mortgage. Most lenders let you buy points when you close on your loan. Each point or fraction of a point you buy reduces the interest rate on your loan.

Because points are a form of interest, you can deduct the cost of discount points. Keep in mind that other loan fees or closing costs, like origination fees, are not deductible.

4. Property taxes

The IRS allows taxpayers to deduct the cost of paying state and local taxes (SALT). This can include state income taxes and local property taxes. If you live in a high-cost or high-tax area, such as New York or California, this deduction can be substantial.

For 2025, you are limited to deducting a maximum of $10,000 in SALT. For 2026 through 2029, that limit will rise to $40,000.

5. Necessary home improvements

In some instances, a necessary home improvement may be deductible.

This is not for redoing your kitchen or building a deck. Instead, the deduction is for people who need to make their home safe and accessible. For example, adding railways, widening doorways for handicap access, or installing medical equipment are likely to qualify for a deduction.

6. Home office expenses                                                  

If you operate a business out of your home, you can take a deduction for your home office costs.

In general, to qualify, you must use that part of your home regularly and exclusively for business purposes. You can’t deduct costs related to your dining room just because you held a business meeting there once. You also don’t qualify for the deduction if you work from home for another employer.

The amount of the deduction is based on the size of the space dedicated to your home office as compared to the overall size of your home. You can either take the simplified option of $5 per square foot of office space (up to $1,500) or find the percentage of your home’s square footage that is dedicated to the home office and deduct that percentage of the cost of things like mortgage payments, utility payments, insurance, and the like.

7. Capital gains

When you sell your home, you may sell it for more than you originally paid for it. If the home was your primary home, you can deduct a portion of the capital gains you receive, reducing how much you pay in capital gains taxes.

To qualify, you must meet both the ownership test and use test, meaning you must have owned and used the home as your primary residence for at least two out of the last five years.

If you qualify, you can exclude $250,000 of capital gains ($500,000 if married, filing jointly) when you file your tax return after selling the property.

8. Rental income

If you have rental income from a rental property or you rent out part of your home, you may incur some tax-deductible expenses.

For example, if you rent a room in your home or rent a whole property, you can deduct some or all of the cost of property taxes, mortgage interest, utilities, or maintenance as a business expense.

Consult the IRS website for rules and guidance, as making sure you are eligible to take the deduction can be complicated.

Nondeductible home expenses

Though the IRS offers many deductions for home-related expenses, there are just as many that are ineligible for deductions. You should be aware of some nondeductible home expenses, including:

• Fire insurance premiums
• Homeowners insurance premiums
• The principal amount of your mortgage payment
• Domestic service
• Depreciation
• Utilities, including gas, electricity, and water (unless you rent out part of your home)
• Down payment

The bottom line: Explore your tax benefits as a homeowner

Tax deductions can help make owning a home more affordable. Before using tax deductions, check to make sure the amount you can deduct by itemizing is more than you’d get by using the standard deductions.

If you’re ready to learn more about taxes related to homeownership, Rocket Mortgage has plenty of resources available.

This article is for informational purposes only, and is not a substitute for professional advice from a medical provider, licensed attorney, financial advisor, or tax professional. Consumers should independently verify any service mentioned will meet their needs.