2025 Tax Tips for Homeowners: What You Can Deduct

Owning a home comes with financial responsibilities, but it also provides valuable tax benefits. As we enter the 2025 tax season, homeowners should take advantage of deductions and credits that can help lower their taxable income. From mortgage interest to first-time homebuyer credits, here’s a breakdown of what homeowners can deduct and how to maximize savings on their tax return.

1. Mortgage Interest Deduction

One of the biggest tax benefits for homeowners is the mortgage interest deduction. If you have a mortgage on your primary residence (or a second home), you can deduct interest paid on loan amounts up to $750,000 ($375,000 for married couples filing separately).

How to claim it:

• Your lender will send you Form 1098, which details how much mortgage interest you paid in 2024.

• This deduction is available if you itemize deductions instead of taking the standard deduction.

2. Property Tax Deduction

Homeowners can deduct state and local property taxes paid in 2024, up to a limit of $10,000 ($5,000 for married individuals filing separately).

Key tip: If you’ve prepaid property taxes for 2025, you may be able to deduct those as well, depending on IRS rules.

3. Mortgage Insurance Premiums (PMI) Deduction

If you put down less than 20% when buying your home and pay private mortgage insurance (PMI), you may be able to deduct those premiums if your adjusted gross income (AGI) is under the limit set by the IRS.

4. Home Office Deduction

If you work from home, you may qualify for the home office deduction, which allows you to deduct a portion of home expenses such as mortgage interest, utilities, and internet.

Requirements:

• The space must be used exclusively for business.

• You can choose the simplified method (a standard rate per square foot) or the actual expenses method (based on a percentage of your home’s total expenses).

5. Energy-Efficient Home Improvements Tax Credit

Homeowners who made energy-efficient upgrades in 2024 can benefit from the Energy Efficient Home Improvement Credit, which covers up to 30% of qualified expenses for:

• Solar panels

• Energy-efficient windows and doors

• Heat pumps and insulation

• Energy audits

Tip: Keep receipts and manufacturer certifications to ensure eligibility when filing.

6. First-Time Homebuyer Tax Credit

While the federal first-time homebuyer tax credit is not currently available, some states offer credits or deductions for first-time buyers. Check with a tax professional to see if you qualify for any state or local programs.

7. Capital Gains Exclusion on Home Sales

If you sold your home in 2024 and made a profit, you may be able to exclude up to $250,000 ($500,000 for married couples) from capital gains taxes, provided:

• You lived in the home for at least two out of the last five years before selling.

• The home was your primary residence.

8. Rental Property Deductions

If you rent out part of your home or own a rental property, you may be able to deduct expenses such as:

• Mortgage interest

• Property management fees

• Depreciation

• Repairs and maintenance

Final Tips for Maximizing Your 2025 Tax Deductions

✔️ Keep thorough records of mortgage payments, property tax bills, home improvement receipts, and energy-efficient upgrades. ✔️ Consider working with a tax professional to ensure you claim all eligible deductions. ✔️ If you’re unsure whether to itemize or take the standard deduction, compare both methods to determine which saves you more money.

Owning a home comes with financial perks, and knowing how to leverage tax deductions can help you maximize savings. Need more guidance? The Espinosa Group is here to help homeowners navigate the financial side of real estate. Contact us today!