3 Smart Tax Strategies Homeowners Can Use in the Next 12 Months
Written by
Sean Bryant
Edited by
Zuri Anderson
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There are many advantages to being a homeowner.
Not only does it allow you to build equity over time and have a more predictable monthly housing payment, but it also offers several tax benefits.
If you’re looking to lower your tax liability this year, make sure you’re taking advantage of these three tax strategies for homeowners.
Reevaluate Whether Itemizing Still Makes Sense
When the Tax Cuts and Jobs Act was announced in 2017, it significantly increased the standard deduction. For tax year 2025, it’s $15,750 for single filers and $31,500 for married couples filing jointly. This reduced the number of tax filers who itemized deductions. So the question you should be asking yourself is, “Does it still make sense to itemize?”
Answering this question comes down to understanding your itemized deductions. You can deduct mortgage interest on a loan of up to $750,000. The SALT deduction allows you to deduct up to $10,000 in state and local property taxes. If you’ve taken out a home equity loan or a HELOC, you can deduct the interest as long as the funds were used for home upgrades.
Once you understand what your total itemized deductions would be, you’ll know whether you should continue itemizing or just take the standard deduction.
Plan Energy-Efficient Upgrades for Maximum Credits
If you’re planning home upgrades, this is the perfect time to take advantage of available tax credits. Through 2032, you can receive a 30% credit for installing solar panels, solar water heaters, geothermal heat pumps or battery storage.
Additionally, energy-efficient upgrades such as new windows, doors, insulation and some HVAC systems may also qualify for tax credits.
Track Capital Improvements To Increase Your Cost Basis
If you make home upgrades, you’ll want to keep accurate records of the costs. Capital improvements such as a new roof, a kitchen remodel, a room addition or an HVAC upgrade can increase your cost basis.
When you sell your home, you’ll subtract your cost basis from the sales price to determine your taxable gain. If you’re a single filer, any capital gains over $250,000 are taxable. For married couples filing jointly, you can exclude the first $500,000 from tax.
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