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Tax Benefits of Owning a Home

Byline profile imageEdited by Arturo Conde, CEPF®
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Byline profile imageEdited by Patrick Villanova, CEPF®
Byline profile imageReviewed by Michele Cagan, CPA
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The financial implications of owning a home go beyond just pride of ownership, as it can offer potential tax benefits. In the U.S., owning a home can lead to significant tax benefits, which might include deductions for mortgage interest, property taxes and home sale exclusion, among others. A financial advisor can help you determine how to take advantage of these opportunities in your own tax situation. Here’s what you need to know.

How Homeownership Affects Your Taxes

Homeownership can significantly impact your taxes because it changes the types of assets you own. Buying, selling and even covering the costs of owning a home can trigger tax-related events that offer unique benefits.

Here are some of the most common benefits of homeownership that can directly help you in your tax situation:

1. Mortgage Interest Deduction

One of the largest tax benefits of homeownership is the mortgage interest deduction. This allows homeowners to deduct the interest paid on the first $750,000 of mortgage debt ($375,000 for married couples filing separately). For mortgages originated on or before Dec. 15, 2017, the deduction applies to the first $1 million of mortgage debt ($500,000 for married couples filing separately).

In a given year, a couple with a $250,000 mortgage at 4% would pay about $10,000 in interest. Their actual tax savings would depend on their marginal tax bracket.

2. SALT Deduction

Along with mortgage interest, homeowners can also potentially deduct up to $40,400 in state and local taxes in 2026. Known as the state and local taxes (SALT) deduction, this can be a significant financial relief, especially in high property tax areas. The SALT deduction was capped at $10,000 from 2018 through 2024, but increased to $40,000 in 2025 under the One Big Beautiful Bill Act. The deduction will reset to $10,000 in 2030.

3. Home Office Deduction

For homeowners who own businesses and use part of their home strictly for business, the home office deduction can be an accessible tax benefit. Anyone who freelances has a side gig, works as a 1099 contractor, or has a small business can look into the tax savings this special deduction offers.

4. Home Sale Exclusion

When homeowners sell their primary home, the IRS provides another significant tax benefit to help incentivize sellers. If you’re selling your home and meet certain criteria, you can exclude up to $250,000 ($500,000 for joint filers) of capital gains from the home sale.

For example, if a couple sells their home and realizes a gain of $200,000, this amount could potentially be tax-free.

The True Cost of Homeownership

A tax expert explaining the tax benefits of buying a home.

While homeownership comes with its set of tax benefits, it’s worth weighing these advantages against the overall costs. The costs of homeownership can actually be substantial, especially if your home needs a good amount of work. If you’re considering the purchase of a home, evaluating the differences in tax outcomes between owning and renting can be useful.

While renters do not have access to tax benefits such as mortgage interest and property tax deductions, they also aren’t burdened by home maintenance and repair costs. The costs can vary based on the home that you can afford and where you live.

These costs may include mortgage payments, property taxes, home insurance, maintenance, repairs or even homeowners association fees in some cases. Understanding the money you’ll have to put into your home over time and comparing it with your tax savings can help you decide if the property cost and timing are right for you.

Bottom Line

A homebuyer reviewing how much money she can save on tax benefits.

Owning a home can be a very complex decision that requires finding the right property, the right price and the right timing. It’s not a decision to be taken lightly, but one area that is very important to include in that decision-making process is the potential tax benefits. Buying a home might offer significant savings on your tax bill. With the complexities of taxes relating to homeownership, consulting with a financial advisor can make a world of difference.

Tips for Tax Planning

  • There are many tax benefits to owning a home, but that might not be the only tax strategy that you’re not taking advantage of currently. A financial advisor who specializes in taxes can help you plan accordingly to maximize your deductions and put you in a better financial situation. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Property taxes are an important part of tax planning when you own a home. Use SmartAsset’s free property tax calculator to estimate how much you might owe in your given county.

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