Homeowner Tax Credits & Deductions (2025 Outlook)
Source: www.reiskills.com | Report Focus: 2024-2025 Tax Years & Key 2025 Changes
1. Executive Summary
The homeowner tax landscape for the 2024 tax year (filed in 2025) remains stable under the Tax Cuts and Jobs Act (TCJA). However, 2025 is a critical planning year, as major provisions are set to expire after December 31, 2025.
This means significant changes are possible for the 2026 tax year, including higher mortgage interest deduction limits and the removal of the SALT deduction cap.
2. Key Active Deductions & Credits (2024-2025)
The following benefits are available for the 2024 tax year (filed in 2025). Itemizing is required for most deductions, which is only beneficial if your total itemized deductions exceed the high standard deduction ($14,600 Single / $29,200 Married Filing Jointly for 2024).
| Benefit | Description | Key Limitations & Outlook | IRS Resource |
| Mortgage Interest | Deduct interest on mortgages. | Limited to debt of $750,000. Set to revert to $1,000,000 for new loans in 2026. | IRS Publication 936 |
| SALT Deduction | Deduct state/local property, income, and sales taxes. | Capped at $10,000. The cap is scheduled to expire after 2025. | IRS Topic No. 503 |
| Home Equity Interest | Deduct interest on HELOCs/home equity loans. | Only if funds are used to “buy, build, or substantially improve” your home. | IRS Newsroom on HELOCs |
| Capital Gains Exclusion | Exclude profit from the sale of your primary home. | $250,000 (Single) / $500,000 (Married). Must be your primary home for 2 of the last 5 years. | IRS Sale of Your Home |
| Energy Efficiency Credit | Credit for renewable energy installations. | Residential Clean Energy Credit: 30% credit for solar, geothermal, battery storage, etc. | Residential Clean Energy Credit |
Other Notable Provisions:
- Points: Often fully deductible in the year paid for a new home purchase. IRS Points Deduction
- Home Office Deduction: For exclusive, regular business use. IRS Home Office Deduction
- Mortgage Credit Certificate (MCC): Active program for first-time homebuyers. IRS Mortgage Credit Certificate
3. Expired or Limited Provisions
- Private Mortgage Insurance (PMI) Deduction: This deduction has expired and is not available for tax years after 2018. IRS Topic No. 514
4. Critical 2025 Planning Considerations
- The TCJA “Cliff”: The most significant event is the expiration of key TCJA provisions at the end of 2025. Homeowners, especially in high-cost or high-tax states, should monitor this closely.
- Plan Major Transactions: If you are considering a large home purchase, sale, or refinance in 2025-2026, model the tax implications under both current and potential future laws.
- Leverage Permanent Benefits: The Capital Gains Exclusion and Energy Credits are stable, powerful benefits that are not scheduled to change.
5. Recommendations
- Consult a Professional: Given the impending changes, consult a CPA or tax advisor for personalized planning.
- Stay Informed: Monitor the IRS Newsroom for official updates on potential legislative changes throughout 2025.
Disclaimer: This report is for informational purposes only and does not constitute tax advice. Please consult with a qualified tax professional for advice tailored to your specific situation. Always refer to the official IRS website for the most authoritative information.
