What Homeowners Should Know About Mortgage and Energy Tax Breaks
Deductions for mortgage interest and credits for efficient upgrades can add up, but the rules reward careful record-keeping.
Owning a home comes with a set of tax benefits that, used well, can meaningfully lower a bill, from the long-standing mortgage interest deduction to credits for energy-efficient upgrades.
The mortgage interest deduction remains a fixture, though the higher standard deduction means fewer households itemize than in the past. For those with larger loans or in high-cost areas, itemizing can still come out ahead.
Energy upgrades
Credits for efficient improvements, such as heat pumps, insulation, and solar installations, have grown more generous and more popular. They directly reduce tax owed rather than merely reducing taxable income, which makes them especially valuable.
The catch is documentation. Homeowners need to keep receipts and manufacturer certifications to substantiate energy credits, and some improvements have caps or phase-outs. Reading the fine print before a major purchase avoids disappointment at filing time.
Selling a home
There is also a substantial exclusion on gains from selling a primary residence, provided ownership and use tests are met. For long-term owners in appreciating markets, that exclusion can shield a large sum. As always, the details reward a careful look before, not after, the transaction.
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