Owning a Home Comes with Tax-Time Perks — But Only If You Itemize
Owning a home offers many financial benefits — from building equityEquity is the portion of your home's value that you own. It's calculated by subtracting the balance of your mortgage and any other loans secured by the home from its current market value. Your equity grows in two ways: by paying down... More to avoiding rent increases. And for some homeowners, there may also be tax deductions available.
To benefit from these deductions, you’ll need to itemize your deductions instead of taking the standard deduction. For the 2024 tax year (filed in 2025), the standard deduction is:
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$14,600 for single filers
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$21,900 for heads of household
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$29,200 for married couples filing jointly
Itemizing only makes sense if your deductible expenses exceed these amounts. For homeowners, the main deductible items typically include mortgage interestInterest: the cost of borrowing money, charged as a percentage of the outstanding balance and paid in arrears (unlike rent, which is paid in advance). More, real estate taxes, and in some cases, mortgage insurance and points.
Here are the key documents homeowners should have on hand when preparing their taxes:
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IRS Form 1098 – Provided by your mortgage lender, this shows how much mortgage interestInterest: the cost of borrowing money, charged as a percentage of the outstanding balance and paid in arrears (unlike rent, which is paid in advance). More, points, and (in some cases) private mortgage insurance you paid during the year. It may also include property taxes paid from your escrow accountAn escrow account is an account your mortgage lender maintains to collect and pay certain property-related expenses on your behalf. Each month, a portion of your mortgage payment is deposited into the account to cover items such as property taxes and homeowners... More.
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IRS Form 1040 – This is your actual tax return form.
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Schedule A (Form 1040) – The form used to itemize deductions such as mortgage interestInterest: the cost of borrowing money, charged as a percentage of the outstanding balance and paid in arrears (unlike rent, which is paid in advance). More and property taxes.
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Property Tax Bill – If property taxes weren’t paid through escrow or aren’t shown on your 1098, you’ll need this bill as proof.
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Loan ClosingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More Disclosure – This can show any prepaid points or taxes from a home purchase or refinance that might be deductible.
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Receipts for Energy-Efficient Improvements – While not itemized deductions, certain energy-saving upgrades (like solar panels or energy-efficient windows) may qualify for tax credits. Be sure to keep receipts and documentation.
I’d be happy to connect you with one of my trusted tax professionals who can review your situation and help you decide whether itemizing will save you money.
And if you’re thinking about buying a home or refinancing, let’s talk!