The Hidden Tax Benefits of Home Ownership

For many Americans, buying a home is not just about building equity and having a place to call your own—it’s also a powerful way to unlock hidden tax advantages. While the 2017 Tax Cuts and Jobs Act (TCJA) reshaped some of these benefits, homeowners still enjoy valuable deductions and credits. And starting in 2026, when key provisions of the TCJA expire under the so-called “Big Beautiful Bill,” some tax rules will revert to pre-2018 law—changing the landscape again.

1. Mortgage Interest Deduction

Currently, if you itemize, you can deduct mortgage interest on up to $750,000 of qualified debt ($375,000 if married filing separately) for mortgages taken out after December 15, 2017. Older loans may still qualify for the pre-2018 $1 million cap.

👉 2026 Change: The cap is scheduled to revert back to the higher $1 million ($500,000 if MFS), making this deduction more generous for future homeowners with larger mortgages.

2. Property Tax Deduction (SALT)

Right now, you can deduct state and local taxes—including property taxes—but the deduction is capped at $10,000 ($5,000 if MFS). This has limited the benefit for homeowners in high-tax states like California, New York, and New Jersey.

👉 2026 Change: The SALT cap expires, and taxpayers will once again be able to deduct the full amount of state and local taxes paid, making property tax deductions far more valuable.

3. Home Office Deduction

If you’re self-employed and use part of your home exclusively and regularly for business, you may qualify for the home office deduction. This allows you to deduct a portion of expenses such as utilities, insurance, and even mortgage interest and property taxes.

👉 No major 2026 change here—the rules for self-employed taxpayers remain. (Note: W-2 employees lost the ability to deduct unreimbursed employee expenses under TCJA, and that break is also set to return in 2026.)

4. Capital Gains Exclusion

When you sell your primary residence, you may exclude up to $250,000 of capital gains ($500,000 for married couples filing jointly) from your taxable income—provided you’ve owned and lived in the home for at least two of the past five years.

👉 2026 Change: This exclusion is unaffected by the TCJA sunset—still one of the most powerful tax breaks available.

5. Energy-Efficient Upgrades

Homeowners who invest in energy efficiency can take advantage of tax credits. Under the Inflation Reduction Act, credits are available for solar panels, energy-efficient windows, doors, insulation, and more. These credits directly reduce your tax bill, not just taxable income.

👉 2026 Change: These credits continue beyond 2026, though amounts and eligibility vary year by year.

6. Mortgage Insurance Premium Deduction (If Extended)

Congress has periodically extended the deduction for private mortgage insurance (PMI) and FHA, VA, or USDA loan insurance premiums. It has lapsed and been reinstated multiple times.

👉 2026 Note: With the passage of the One Big Beautiful Bill Act (2025), the deduction has been permanently reinstated starting in tax year 2026. Even better, mortgage insurance premiums will now be treated as deductible mortgage interest, simplifying how homeowners claim the benefit.

Home ownership isn’t just about stability and long-term investment—it’s also about hidden tax opportunities that can help you save each year and when you eventually sell. With the 2026 sunset of TCJA provisions under the “Big Beautiful Bill,” many homeowners—especially in high-tax states—may regain larger deductions. Whether you’re a new homeowner or considering buying, understanding these tax benefits now can help you plan ahead and maximize your savings in the years to come.