Homeownership often comes with new expenses, but you can find opportunities to save at tax time.
If you purchased a new home in 2025, here are all the tax breaks you might be able to claim as you prepare your tax return in 2026.
— Mortgage Interest Deduction
— Points Deduction
— Real Estate Tax Deduction
— Private Mortgage Insurance Deduction
— Mortgage Credit Certificate
— Home Energy Efficiency Credits
— Home Office Deduction
— State Tax Breaks
Mortgage Interest Deduction
Mortgage interest can be one of the largest monthly expenses for new homeowners, but it can also be one of a taxpayer’s biggest deductions.
“It can never hurt, but the impact depends on how big a mortgage you have,” says Seth Kamens, a certified public accountant at Kamens & Associates in Livingston, New Jersey.
Only interest on a mortgage balance up to $750,000 is deductible. What’s more, you can only get a tax benefit if you itemize your deductions. With the standard deduction for tax year 2025 set at $15,750 for single taxpayers and $31,500 for married couples filing jointly, many people may find their mortgage interest is not enough to justify itemizing.
Points Deduction
Mortgage discount points, which are essentially prepaid interest, can also be included in itemized deductions. As with other mortgage interest, a cap of $750,000 applies.
“Let’s say you buy a million-dollar home, 75% of (the points) can be used as an interest deduction,” according to David Perez, CEO of tax planning software Tax Maverick. That assumes your mortgage for the home is $1 million.
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Real Estate Tax Deduction
The state and local tax deduction, commonly called SALT, can also benefit homeowners. It allows them to deduct the real estate taxes they pay each year.
“It’s helpful, but it’s not the game-changer people make it out to be,” Kamens says.
Again, that’s because the standard deduction is now so large that unless a household has a very high property tax bill, its itemized deductions may not exceed the standard amount.
Last year’s One Big Beautiful Bill Act has made this deduction more attractive, though. It was previously capped at $10,000, but up to $40,000 can now be deducted. To be eligible to deduct the full $40,000, taxpayers must have modified adjusted gross incomes lower than $500,000.
Private Mortgage Insurance Deduction
If you made a down payment of less than 20% when you purchased your home, you are likely paying for private mortgage insurance. This coverage is required for conforming loans and protects the lender in case you stop making payments. FHA mortgages are subject to mortgage insurance premiums, which are similar to PMI.
“This could be a few hundred dollars per month, and that few hundred dollars can be deductible,” Perez says.
It’s just not deductible for the 2025 tax year. A deduction for PMI and MIP payments expired after 2021, but the One Big Beautiful Bill Act reinstated it, starting in 2026. That means that homeowners can include these payments in their itemized deductions when they file taxes next spring.
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Mortgage Credit Certificate
Mortgage credit certificates are issued by state and local housing agencies to first-time homebuyers who meet income requirements.
“It’s very rare that these happen,” Perez says. “I’ve never seen one because the incomes (to qualify) are so low.” He says people with incomes low enough to qualify for a mortgage credit certificate may struggle to win approval for a loan.
However, if you did happen to receive a mortgage credit certificate when you bought your home, you can use it to claim a federal tax credit of up to $2,000. The credit is calculated as a portion of the mortgage interest paid on the home. Any interest beyond the value of the credit can be claimed as part of a taxpayer’s itemized deductions.
Home Energy Efficiency Credits
Homeowners who made updates last year may benefit when they file taxes this spring. Both the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit provide a credit worth 30% of the cost of energy-efficient home upgrades, such as new windows and doors, added insulation and renewable energy installations.
However, both expired at the end of 2025, so the spring 2026 tax season is the last one when homeowners can take advantage.
Even with the tax credits phasing out, homeowners should keep good records of these and other updates they make to their home. “When you sell the house, that will offset your capital gains,” says Rob Burnette, financial planner and tax preparer with Outlook Financial Center in Troy, Ohio.
Home Office Deduction
If you are self-employed and work from home, you may be able to claim a home office deduction. Note that this deduction isn’t available to remote workers employed by someone else.
A home office is defined as a space used regularly and exclusively for work, and it must serve as someone’s principal place of business. Taxpayers with a qualifying home business can deduct a percentage of their home’s costs, such as mortgage interest, insurance and utilities, as a business expense on Schedule C.
The IRS provides a simplified method for calculating a home office deduction, which is $5 per square foot, up to 300 square feet.
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State Tax Breaks
Most tax breaks for homeowners come from the federal government, Kamens says, but states can have their own incentives.
For instance, the Illinois Property Tax Credit is worth 5% of Illinois property tax paid on primary residences by residents with incomes below $250,000 for single taxpayers and $500,000 for married couples filing jointly.
State and federal tax codes can and do change regularly, so your new house may lead to even more tax savings in the years to come.
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First-Time Homebuyer? Here’s Every Tax Break You Qualify For in 2026 originally appeared on usnews.com