Tax Tips for Homeowners and Buyers: Essential Information for Filing in 2025

Taxes may not be the most exciting subject, but understanding how they relate to homeownership is crucial. Here are a couple of the top deductions and credits you should keep in mind this tax season:

Mortgage Interest Deduction

The mortgage interest deduction is one of the most valuable tax breaks available to homeowners. If you’ve taken out a mortgage to purchase, build, or improve your home, the interest you pay on that loan can often be deducted from your taxable income, which could result in significant savings.

Energy-Efficient Home Improvements

Making energy-efficient upgrades to your home not only helps reduce your carbon footprint but can also provide substantial tax savings. The government offers various tax credits to encourage homeowners to invest in energy-saving improvements. These credits can help offset the cost of upgrading your home to be more energy-efficient. In addition to federal credits, many states offer additional incentives for energy-efficient home improvements. These can include rebates, tax credits, or low-interest loans to offset the cost of energy-saving upgrades. Be sure to check with your state’s energy office or tax authority for any available programs in your area.

Property Tax Deductions

Property taxes are a significant expense for homeowners, but the good news is that you may be able to reduce your taxable income by deducting property taxes on your federal tax return. The IRS allows homeowners to deduct certain property taxes they pay on their primary residence, second homes, and sometimes even rental properties. You can generally deduct the full amount of property taxes you pay during the tax year, as long as they are assessed based on the value of your property. However, the total amount you can deduct may be subject to certain limitations under the SALT (State and Local Tax) Deduction Cap. 

Tax season doesn't have to feel stressful. Stay organized, understand your eligible deductions, and reach out to a tax professional if needed. Property tax deductions can help ease the financial burden of homeownership, especially in areas with high property taxes. Make sure to keep accurate records, understand the SALT cap, and consider working with a tax professional to ensure you're maximizing your property tax deductions. Your savings could add up!