What Homeowners Can (and Can’t) Deduct

Homeownership comes with real financial benefits at tax time, but also with a lot of confusion about what’s actually deductible. This guide covers the most important deductions available to homeowners in 2026, along with some common misconceptions that trip people up.

Mortgage Interest Deduction

For most homeowners, mortgage interest is the most significant deduction available. You can deduct the interest paid on loans up to $750,000 used to buy, build, or substantially improve your primary or secondary home. Interest on loans above that threshold is not deductible.

You’ll receive a Form 1098 from your lender in January or February showing how much interest you paid in the prior year. This goes on Schedule A of your federal return as an itemized deduction.

One important note: this deduction only makes sense if your total itemized deductions exceed the standard deduction ($16,100 for single filers and $32,200 for married filing jointly in 2026). Many homeowners, especially in the early years of a mortgage when interest payments are higher, can benefit significantly from itemizing. Your CPA can help you determine which approach is better for your situation.

Property Taxes

State and local property taxes are deductible, but subject to the SALT (State and Local Tax) deduction cap of $40,400 per year ($20,200 if married filing separately) for 2026. This is a significant increase from prior years and provides meaningful relief for homeowners in higher-tax states.

You can only deduct property taxes in the year you actually paid them. Prepaying future years’ taxes generally doesn’t accelerate the deduction.

Home Office Deduction

If you’re self-employed and use part of your home exclusively and regularly for business, you may be eligible for the home office deduction. This is one of the most valuable deductions available to self-employed homeowners, but it requires the space to be used solely for business. A guest room that occasionally doubles as an office doesn’t qualify.

The simplified method allows a deduction of $5 per square foot, up to 300 square feet. The regular method calculates actual expenses (a proportionate share of mortgage interest, utilities, insurance, and depreciation), which often results in a larger deduction.

Points Paid on a Mortgage

Points paid when you took out your mortgage may be deductible in the year paid, or may need to be spread over the life of the loan, depending on the circumstances. Points paid for refinancing are generally deducted over the loan’s life, not all at once.

What Homeowners Can’t Deduct

Several home-related expenses are commonly mistaken for deductions. HOA dues are not deductible for your primary residence (they may be for a rental property). Homeowners' insurance is not deductible. General home repairs and maintenance are not deductible. The principal portion of your mortgage payment is not deductible, only the interest.

Home improvements are not immediately deductible, but they do add to your home’s cost basis, which matters when you eventually sell.

Selling Your Home: The Exclusion

This one deserves mention because it’s one of the most significant tax benefits available to homeowners: when you sell your primary home, you can exclude up to $250,000 of capital gains from taxation ($500,000 for married couples filing jointly), provided you’ve lived in the home as your primary residence for at least two of the five years before the sale.

Have questions about your specific home-related deductions? Bring your mortgage statement and property tax records to your next appointment. We’ll make sure you’re capturing everything you’re entitled to. Call us at (828) 570-5760 or contact us here.

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This blog post is provided for educational purposes only and does not constitute personalized financial, tax, or investment advice. Tax laws are complex, change frequently, and vary based on individual circumstances. Before implementing any strategies discussed, please consult with qualified financial advisors, tax professionals, or CPAs who can assess your specific situation. This content should not be relied upon as a substitute for professional consultation.