Home-Related Tax Deductions & Savings: A Complete Guide to Maximize Your Tax Benefits in 2025

Are you a homeowner looking to save money on your taxes? Whether you’re filing as a new homeowner or a seasoned real estate investor, understanding home-related tax deductions and credits can put real cash back in your pocket. In this month’s blog, we’ll cover the top home-related tax deductions, eligibility requirements, and tips to maximize your tax savings in 2025.

✅ What Are Home-Related Tax Deductions?

Home-related tax deductions reduce your taxable income, lowering the amount of federal income tax you owe. These deductions are typically available to homeowners who itemize deductions instead of taking the standard deduction.

🏡 Common Home-Related Tax Deductions

1. Mortgage Interest Deduction

One of the biggest tax breaks for homeowners.

• What it is: You can deduct the interest paid on your home mortgage.
• Limit: Interest on up to $750,000 of mortgage debt ($375,000 if married filing separately) for mortgages taken after December 15, 2017.
• Includes: First and second homes, refinanced loans, and some home equity loans if used for home improvement.

2. Property Tax Deduction

• What it is: You can deduct state and local property taxes.
• Limit: Combined with other state and local taxes (SALT), capped at $10,000 per year ($5,000 if married filing separately).

3. Home Office Deduction

• What it is: Deduct expenses for using part of your home regularly and exclusively for business.
• Eligibility: Only self-employed individuals or independent contractors can claim this deduction.
• Covers: Portion of rent/mortgage, utilities, repairs, insurance.

4. Points Deduction

• What it is: Deduct mortgage points (prepaid interest) in the year they were paid.
• Tip: Points must be calculated as a percentage of the loan amount and used to buy or improve your primary home.

5. Home Improvement Loan Interest Deduction

• What it is: Interest on home equity loans or lines of credit used for substantial home improvements may be deductible.
• Note: The improvements must “add value” or extend the life of your home.

6. Energy-Efficient Home Improvements

• Tax Credit: The Energy Efficient Home Improvement Credit (up to 30% of qualifying costs).
• Includes: Solar panels, energy-efficient windows, insulation, HVAC upgrades.

📋 Who Is Eligible for Home-Related Tax Deductions?

To qualify for most of these deductions:

• You must own the home (or be paying the mortgage).
• You must itemize deductions using Schedule A.
• You must use the home as a residence, unless claiming the home office or rental property deductions.
• For home office deductions, the space must be used regularly and exclusively for business.

💡 7 Tips to Maximize Your Home Tax Deductions in 2025

1. Keep Good Records
   Save mortgage statements, property tax bills, receipts for home improvements, and energy upgrades.
2. Use a Tax Professional or Software
   Home-related tax deductions can be complex. Consider using free software or hiring a CPA to ensure accuracy.
3. Bundle Deductions
   If your itemized deductions are just under the standard deduction, consider “bunching” expenses (like prepaying property taxes) into one year.
4. Refinance Strategically
   Refinancing can offer new deductible interest. Be mindful of the points paid and how they are allocated.
5. Claim Energy Credits Early
   Some energy tax credits phase out or require specific documentation—file early and include Form 5695 if needed.
6. Don’t Forget Capital Gains Exclusion
   If you sell your primary residence, you can exclude up to $250,000 ($500,000 for married couples) of the gain from taxes, if you’ve lived in the home for at least 2 of the last 5 years.
7. Understand State-Level Benefits
   Florida offers homestead exemptions, first-time homebuyer deductions and other incentives–make sure you check them out!

🧾 Save More by Knowing Your Home Tax Benefits

Homeownership can be a great way to build wealth—and reduce your taxes. With the right strategy, you can take advantage of home-related deductions, energy-efficiency credits, and capital gains exclusions to lower your overall tax liability.

Make sure to stay organized, stay informed, and consult with a tax professional if you’re unsure about what qualifies. The IRS offers plenty of homeowner-friendly options—you just need to know where to look.

Note: This is NOT professional tax advice. Dolaghan Law recommends consulting with a tax professional regarding any questions you have regarding your taxes.