As every homeowner knows, owning a home comes with plenty of expenses. The good news is that some of those costs may help reduce your tax bill. The problem is that many homeowners miss deductions simply because they don’t know what’s available or assume they won’t qualify; others leave money on the table because they don’t keep the right records throughout the year.
Tax rules can change quickly, and 2026 brings a few important updates homeowners should be aware of. Whether you’ve recently purchased a home, are planning renovations, or have owned your property for years, we recommend taking the time to understand available homeowner credits and deductions, as they could make a meaningful difference when tax season arrives.
Let’s look at the key homeowner tax benefits available in 2026 and how they work.
Do you get a tax credit for buying a home?
No, not in the form of a direct federal home buyer tax credit. Most tax benefits for homeowners come through deductions that reduce taxable income, rather than credits that directly reduce taxes owed:
- A tax credit lowers your tax bill dollar for dollar
- A deduction lowers the amount of income that gets taxed
For many homeowners, deductions tied to mortgage interest, property taxes, mortgage insurance, and home-related expenses can still result in significant savings.
What tax deductions are available to homeowners in 2026?
- Mortgage interest deduction
- Private mortgage insurance (PMI)
- Discount points
- Property tax deductions
- Interest on home equity loans and HELOCs
- Home office expenses
- Medical-related home improvements
- Capital gains exclusion when selling your home
1. Mortgage interest deduction
The mortgage interest deduction remains one of the most valuable tax benefits available to homeowners. For 2026, homeowners can generally deduct interest paid on up to $750,000 of qualified mortgage debt, or $375,000 if married filing separately.
This deduction is often most valuable during the early years of a mortgage. That’s because a larger portion of each monthly payment goes toward interest rather than reducing the loan balance.
For example, a homeowner with a $500,000 mortgage could pay thousands of dollars in interest during the first few years of ownership. If they itemize deductions, much of that interest may be deductible.
Your mortgage lender should provide IRS Form 1098 each year showing the amount of interest paid. Mortgages that originated between October 13, 1987, and December 16, 2017, may qualify for interest deductions on up to $1 million of debt
2. Private mortgage insurance (PMI)
A significant change for homeowners arrives with 2026 tax returns. Mortgage insurance premiums become tax-deductible again under legislation passed through the One Big Beautiful Bill Act. The deduction had previously expired after the 2021 tax year.
This deduction applies to:
- Private Mortgage Insurance (PMI) on conventional loans
- Mortgage Insurance Premiums (MIP) on FHA loans
- Certain government-backed mortgage insurance programs
The deduction is generally available to taxpayers with adjusted gross income (AGI) up to $100,000 for married couples filing jointly, with phased reductions above that level.
Watch to learn more about the One Big Beautiful Bill Act
3. Discount points
If you purchased discount points when you obtained your mortgage, you may also qualify for a deduction. (Mortgage points are essentially prepaid interest. Homebuyers often pay points upfront to secure a lower interest rate over the life of the loan.)
In many cases, points can be deducted in the year they were paid if:
- The loan was used to buy or build a primary residence
- Paying points is a common practice in your area
- The amount paid is reasonable and customary
- The points are clearly listed on your settlement statement
A homeowner who paid $5,000 in discount points at closing may potentially deduct that amount, depending on their circumstances. If certain requirements are not met, the deduction may need to be spread over the life of the loan instead.
4. Property tax deductions
Property taxes remain deductible for many homeowners who itemize. Current rules allow taxpayers to deduct up to $40,000 in combined state and local taxes, often referred to as the SALT deduction. For married taxpayers filing separately, the limit is generally $5,000.
Eligible taxes may include:
- Local property taxes
- State income taxes
- Certain local assessments related to public infrastructure
For homeowners in areas with higher property values, this deduction can represent a substantial annual tax benefit. Keep in mind that the SALT cap limits the total deduction available, regardless of how much property tax is actually paid.
5. Interest on home equity loans and HELOCs
Many homeowners tap into their property’s equity for renovations, additions, or major projects. Interest paid on a home equity loan or Home Equity Line of Credit (HELOC) may still be deductible in 2026, but only when the funds are used to:
- Buy a home
- Build a home
- Substantially improve a home
Using a HELOC to fund a kitchen remodel, add a bedroom, or replace a roof may qualify, but using those same funds to pay off credit cards or finance a vacation generally does not. The debt limits largely mirror those for mortgage interest deductions, with interest potentially deductible on up to $750,000 of qualifying debt for most taxpayers.
6. Home office expenses
Working remotely doesn’t automatically qualify someone for a home office deduction. The deduction is generally available only to self-employed individuals, freelancers, independent contractors, and certain small business owners.
Importantly, the space must be used regularly and exclusively for business purposes. For example, a spare bedroom used only as an office may qualify, but a dining room table used for occasional work likely would not.
The simplified method allows eligible taxpayers to deduct $5 per square foot for up to 300 square feet of office space, creating a maximum deduction of $1,500. Those with larger or more complex business use may choose to calculate actual expenses instead.
7. Medical-related home improvements
Many homeowners are surprised to learn that certain home modifications related to medical needs may be deductible.
Examples can include:
- Wheelchair ramps
- Stair lifts
- Accessible bathrooms
- Lowered cabinets
- Handrails and safety modifications
If a renovation is medically necessary for a household member, some or all of the cost may qualify as a medical expense deduction. There is an important caveat, however: if the improvement increases the home’s market value, the amount of that increase generally reduces the deductible portion of the expense.
IRS Publication 502 provides detailed guidance on qualifying medical expenses and home modifications.
8. Capital gains exclusion when selling your home
One of the most valuable homeowner tax benefits often comes when it’s time to sell. If you meet ownership and residency requirements, you may exclude:
- Up to $250,000 of capital gains if filing individually
- Up to $500,000 of capital gains if married filing jointly
This means many homeowners can sell their primary residence and pay no federal tax on a significant portion of the profit.
Keep good records throughout the year
The biggest tax mistake homeowners make is waiting until tax season to organize their documents. Good recordkeeping makes it easier to claim legitimate deductions and provides support if questions arise later.
Keep records of:
- Mortgage statements
- Form 1098 documents
- Property tax payments
- Home improvement invoices
- Medical modification expenses
- HELOC and home equity loan records
- Home office documentation
We can help you make the most of your tax benefits
Homeownership can offer valuable tax advantages, but the rules are rarely straightforward. Eligibility often depends on how the property is used, how loans were structured, and whether deductions are properly documented.
We’ll help you maximize available credits, avoid costly mistakes, and plan for long-term savings. Contact us today to get a personalized tax strategy before these homeowner tax benefits disappear.
You may also be interested in: Tax Planning Checklist: Essential questions to discuss with your advisor before year-end