You don't get a refund just for owning a home, but you may reduce the taxes you owe through deductions

Homeownership itself does not trigger a refund. However, certain costs tied to owning a home—mainly mortgage interest and property taxes—can lower your taxable income when you itemize deductions on your federal tax return. The result is a smaller tax bill, which might mean a larger refund if you've had too much withheld from paychecks, or it might mean you owe less at tax time. The key is understanding which homeowner expenses the IRS allows you to deduct and whether itemizing makes sense for your situation.

Most homeowners who benefit from these deductions file Form 1040 with Schedule A (Itemized Deductions) instead of taking the standard deduction. For the 2024 tax year, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. If your home-related deductions add up to more than that, itemizing saves you money.

Key Takeaways

  • Mortgage interest and property taxes are the two largest deductions available to homeowners, but only if you itemize deductions on Schedule A.
  • The standard deduction for 2024 is $14,600 (single) or $29,200 (married filing jointly), so your home deductions must exceed that amount to benefit you.
  • Home office deductions, energy-efficient home improvements, and certain repairs may also reduce your taxable income under specific conditions.
  • You report itemized deductions on Schedule A, which you file along with Form 1040 when you submit your tax return to the IRS.
  • State and local tax deductions (including property taxes) are capped at $10,000 per year, which limits how much you can deduct if you live in a high-tax state.

Mortgage interest deduction and how it works

If you have a mortgage, the interest portion of your monthly payment is deductible on Schedule A. For example, in the first years of a 30-year mortgage, most of your payment goes toward interest rather than principal, so your deduction is larger early on. As you pay down the loan, less of each payment is interest, and your deduction shrinks.

You can only deduct interest on a mortgage up to $750,000 of the loan principal (or $375,000 if you're married filing separately). This limit applies to mortgages taken out after December 15, 2017. If your mortgage predates that, the limit is $1 million. Your lender sends you Form 1098 (Mortgage Interest Statement) each January showing how much interest you paid the previous year—use that figure on Schedule A.

Home equity loans and lines of credit (HELOCs) have different rules. Interest on a home equity loan is deductible only if you used the borrowed money to buy, build, or substantially improve your home. If you borrowed against your home's equity to pay off credit cards or fund a vacation, that interest is not deductible.

Property tax deduction and the $10,000 cap

Property taxes you pay to your state and local government are deductible on Schedule A, but they're subject to a combined cap. You can deduct up to $10,000 per year in state and local taxes (SALT), which includes property taxes, state income taxes, and sales taxes combined. If you live in a state with high property taxes—such as New Jersey, Illinois, or California—you may hit this cap with property taxes alone.

Your property tax bill comes from your county assessor's office. If you pay property taxes as part of your mortgage payment (through an escrow account), your lender includes that amount on Form 1098. If you pay directly to your county, keep your tax bill or receipt as proof. Either way, report the full amount you paid on Schedule A, up to the $10,000 limit.

This $10,000 cap is set to expire after the 2025 tax year unless Congress extends it. For now, plan on the limit staying in place through 2025.

Home office deduction for self-employed and remote workers

If you use part of your home exclusively for business—whether you're self-employed or your employer requires you to work from home—you may deduct a portion of your rent, mortgage interest, property taxes, utilities, and home maintenance. You report this on Schedule C (if self-employed) or as an employee business expense, depending on your situation.

The IRS offers two methods: the simplified method (claiming $5 per square foot of home office space, up to 300 square feet, for a maximum deduction of $1,500 per year) or the actual expense method (calculating your home's total expenses and deducting the percentage that corresponds to your office space). The simplified method is easier; the actual expense method often yields a larger deduction if your home costs are high.

The key requirement is that the space must be used regularly and exclusively for business. A bedroom that doubles as an office does not may have access to. A separate room or a clearly defined area used only for work does.

Energy-efficient home improvements and the residential clean energy credit

Certain energy-efficient upgrades—such as solar panels, heat pumps, insulation, and energy-efficient windows—may may have access to for the Residential Clean Energy Credit (formerly called the Investment Tax Credit). This is a credit, not a deduction, which means it reduces your tax bill dollar-for-dollar rather than reducing your taxable income.

For improvements made in 2024, you can claim up to 30% of the cost of may have access to equipment and installation. The credit applies to solar electric systems, solar water heaters, geothermal heat pumps, small wind turbines, and battery storage systems, among others. You report this on Form 3468 (Investment Credit) and attach it to your Form 1040.

Unlike the mortgage interest deduction, this credit does not require you to itemize. You can claim it whether you take the standard deduction or itemize. However, the credit is nonrefundable, meaning it can reduce your tax bill to zero but cannot generate a refund beyond that (though unused credit can carry forward to future years).

Repairs, improvements, and what you cannot deduct

The IRS distinguishes between repairs (which are not deductible) and improvements (which may be). A repair maintains your home in its current condition—fixing a leaky roof, patching drywall, or repainting. An improvement adds value or extends the life of your home—replacing the entire roof, adding a deck, or installing new plumbing. Improvements that are part of a larger renovation may be deductible as a business expense if the work relates to a rental property you own, but for your primary residence, home improvements are generally not deductible unless they may have access to for the energy credit.

You also cannot deduct homeowners insurance premiums, mortgage principal payments, HOA fees, or general maintenance costs on your primary residence. These are personal expenses, not business or investment expenses. If you own rental property, the rules are different—rental property expenses are deductible—but that falls outside homeowner deductions for your own home.

When itemizing makes sense versus taking the standard deduction

To benefit from homeowner deductions, your total itemized deductions must exceed the standard deduction. For 2024, that threshold is $14,600 (single) or $29,200 (married filing jointly). If your mortgage interest plus property taxes plus other deductible expenses add up to less than that, you're better off taking the standard deduction.

Use this rough math: if you have a $300,000 mortgage at 6.5% interest, your first-year interest is roughly $19,500. Add $5,000 in property taxes, and you're already at $24,500—well above the $14,600 standard deduction for a single filer. But if your mortgage is smaller or your property taxes are low, itemizing may not help.

You do not have to choose the same method every year. If your deductions are close to the standard deduction threshold, you might itemize in a year when you made a large home improvement or paid off a chunk of principal (which increases the interest portion of your remaining payments), and take the standard deduction in other years.

How to report homeowner deductions on your tax return

If you decide to itemize, you'll file Form 1040 with Schedule A attached. Schedule A has separate lines for mortgage interest (line 8), property taxes (line 5a), and other deductions. Gather your Form 1098 from your lender, your property tax bill or receipt, and any documentation for other deductions (energy credit forms, home office calculations, etc.).

If you use tax software, the program walks you through the itemization questions and calculates whether itemizing or taking the standard deduction saves you more money. If you file by hand or work with a tax preparer, provide them with all documentation upfront so they can make the calculation for you.

File your return with the IRS by April 15 (or the next business day if April 15 falls on a weekend). If you're due a refund, the IRS typically processes it within 21 days of receiving your return, though it may take longer if the return requires review.

Frequently Asked Questions

Do I get a refund just for buying a house?

No. Buying a house does not trigger a refund. However, the mortgage interest and property taxes you pay in the year of purchase may be deductible on your tax return if you itemize, which could lower your tax bill or increase a refund you're already due from withholding.

Can I deduct property taxes if I don't have a mortgage?

Yes. Property taxes are deductible on Schedule A whether you own your home outright or have a mortgage. However, they're subject to the $10,000 combined state and local tax cap, so if you also pay state income tax, your property tax deduction may be limited.

What if my home deductions are less than the standard deduction?

Take the standard deduction instead. Itemizing only helps if your total deductions exceed the standard deduction for your filing status. If they don't, itemizing would actually lower your deduction and increase your tax bill.

Can I deduct a home office if I work remotely for an employer?

It depends on your employer's policy and IRS rules. Employees can deduct home office expenses only if your employer requires you to work from home and you have no other workspace provided. Self-employed people have broader home office deduction rights. Check with your employer and a tax preparer about your specific situation.

Do I report the energy credit on the same form as other homeowner deductions?

No. The Residential Clean Energy Credit goes on Form 3468, which you attach to Form 1040. It's separate from Schedule A deductions. The credit does not require you to itemize, so you can claim it even if you take the standard deduction.