Homeowners can get a larger refund than renters, but only if they itemize deductions instead of taking the standard deduction
The difference comes down to deductions. Renters have almost no deductions available to them. Homeowners can deduct mortgage interest, property taxes, and sometimes other housing costs — but only if those deductions add up to more than the standard deduction for their filing status. If they do, itemizing produces a bigger refund. If they don't, the standard deduction is larger, and homeownership makes no difference to the refund amount.
The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly. A homeowner whose mortgage interest and property taxes combined fall short of these numbers will get the same refund as a renter with identical income and withholding. A homeowner whose deductions exceed the standard deduction will owe less tax, which means a larger refund if they had taxes withheld from paychecks.
Key Takeaways
- Homeowners can deduct mortgage interest and property taxes, but renters cannot deduct rent payments.
- You only benefit from these deductions if they total more than the standard deduction — $14,600 for single filers and $29,200 for married couples in 2024.
- Most homeowners do not itemize because their deductions fall below the standard deduction, so they get no refund advantage from owning a home.
- A larger refund from homeownership depends on your mortgage balance, local property tax rates, and your filing status — not on homeownership alone.
Which homeowner deductions actually reduce your tax bill
Mortgage interest is the largest deduction most homeowners can claim. You deduct the interest portion of your mortgage payment, not the principal. The IRS limits this to interest on mortgages up to $750,000 of the original loan amount (or $375,000 if married filing separately). If you took out your mortgage before December 16, 2017, the limit is $1 million.
Property taxes are fully deductible, but with a cap. The State and Local Tax (SALT) deduction limits your total deduction for state income tax, sales tax, and property tax combined to $10,000 per year ($5,000 if married filing separately). This means if your property taxes alone exceed $10,000, you can only deduct $10,000 total when combined with any state income or sales tax you paid.
Mortgage insurance premiums (PMI) are deductible in some years if your adjusted gross income is below a certain threshold, but the deduction phases out as income rises. Home equity loan interest is deductible only if the loan was used to buy, build, or substantially improve the home — not if you borrowed against your equity for other purposes.
Homeowners cannot deduct property maintenance, repairs, utilities, homeowners insurance, or HOA fees. These are personal expenses, not tax deductions.
When itemizing produces a bigger refund than the standard deduction
You itemize only when your total deductions exceed the standard deduction for your filing status. For 2024, that means your mortgage interest plus property taxes (minus the $10,000 SALT cap) must total more than $14,600 if you file single, or $29,200 if you file married filing jointly.
A homeowner with a $300,000 mortgage at 7% interest pays roughly $21,000 in interest in the first year. Add $8,000 in property taxes, and the total is $29,000 — well above the $14,600 standard deduction for a single filer. This homeowner would itemize and reduce their taxable income by $29,000.
A homeowner with a $150,000 mortgage at 7% interest pays roughly $10,500 in interest the first year. Add $4,000 in property taxes, and the total is $14,500 — just below the $14,600 standard deduction for a single filer. This homeowner would take the standard deduction instead, getting no tax benefit from homeownership.
As years pass and you pay down the mortgage, the interest portion of each payment shrinks. A homeowner 20 years into a 30-year mortgage pays far less interest than in year one, which means itemizing becomes less likely over time.
How a bigger deduction translates to a bigger refund
A larger deduction reduces your taxable income, which reduces the tax you owe. The amount of the refund depends on your tax bracket and how much tax was withheld from your paychecks during the year.
Suppose you earn $80,000 and are in the 22% tax bracket. If you itemize $29,000 in deductions instead of taking the $14,600 standard deduction, you reduce your taxable income by $14,400. That saves you $14,400 × 0.22 = $3,168 in tax. If your employer withheld $9,000 in federal tax during the year, you would owe $5,832 instead of $9,000, producing a refund of $3,168 instead of $0.
The refund is not the deduction itself — it is the tax savings from the deduction, multiplied by your tax bracket. A homeowner in the 12% bracket saves less per dollar of deduction than a homeowner in the 24% bracket, even if both have identical deductions.
Why most homeowners do not get a refund boost from owning a home
The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction, which made itemizing less common. Before that law, roughly 30% of taxpayers itemized. Now, roughly 10% do. Most homeowners fall below the itemization threshold.
This is especially true for homeowners with smaller mortgages, newer mortgages (where less of each payment is interest), or homes in areas with lower property taxes. A homeowner in a state with no income tax but moderate property taxes may still not reach the $10,000 SALT cap, making itemization pointless.
Homeowners who do not itemize get the same standard deduction as renters, so homeownership produces no refund advantage for them. The tax code treats them identically for refund purposes.
How to know whether you should itemize
Add up your expected mortgage interest for the year, your property taxes, and any other deductible expenses (charitable donations, medical expenses above 7.5% of income, and so on). If the total exceeds the standard deduction for your filing status, itemizing will lower your tax bill.
Your mortgage servicer sends a Form 1098 in January showing the interest you paid the previous year. Your property tax bill or county assessor's office shows your annual property tax. Add these together and compare to the standard deduction.
If you are close to the threshold, consider whether you made large charitable donations or had significant medical expenses that year. These also count toward itemization. If you are well below the threshold, itemizing will not help, and homeownership produces no refund advantage.
Tax software and tax preparers can calculate both scenarios for you and show which produces the larger refund. Many offer this comparison for free during tax season.
Frequently Asked Questions
Does buying a home may provide a bigger tax refund?
No. A bigger refund depends on whether your deductions exceed the standard deduction, which varies by mortgage size, property tax rates, and your filing status. Many homeowners do not reach the threshold and get no refund advantage from owning a home.
Can I deduct my entire mortgage payment?
No. You deduct only the interest portion, not the principal. Your mortgage servicer shows the breakdown on your Form 1098. Early in the mortgage, most of each payment is interest. Later, most is principal, which is not deductible.
What if my property taxes exceed the $10,000 SALT limit?
You can deduct only $10,000 total for state income tax, sales tax, and property tax combined. If your property taxes alone exceed $10,000, you still deduct only $10,000 when combined with any state income or sales tax you paid that year.
Do I get a refund if I itemize but owe no tax?
No. A deduction reduces the tax you owe, but if you owe zero tax, a larger deduction does not produce a refund. You get a refund only if your withholding exceeds the tax you owe after deductions are applied.
Should I refinance to lower my interest and increase my deduction?
Refinancing to lower your interest rate saves you money on interest payments, but it also lowers your deduction. The interest savings usually outweigh the lost deduction, but run the numbers with a tax preparer or mortgage calculator to compare the two scenarios.