Quick guide · 3 min read
Buying a home
Owning a home brings some deductions, but with a high standard deduction many buyers get less tax benefit than they expect. Here is what helps and what to keep.
- Who it fits
- First-time and repeat buyers.
- Figures
- 2026 tax year
The key rule
Mortgage interest is deductible on up to $750,000 of acquisition debt, but only if you itemize. Property taxes count toward the state and local tax cap.
4 steps
Keep the closing statement
It shows points paid, prepaid interest and property tax, and your cost basis for a future sale.
Check whether you will itemize
For 2026, the standard deduction is $16,100 single and $32,200 joint. Mortgage interest, state taxes up to the cap and gifts to charity need to exceed it to help.
Deduct points
Points paid to buy your main home are generally deductible in the year paid.
Track improvements
Remodels and additions raise your basis and lower the gain when you sell. Keep invoices.
Example
Will you itemize?
A married couple pays $40,000 of mortgage interest and $25,000 of state and property taxes, and gives $5,000 to charity. Their itemized deductions are about $70,000 if their SALT cap allows the full $25,000, well above the $32,200 standard deduction. At a lower interest balance, the standard deduction may win.
Common mistakes
- Home equity loan interest is deductible only when the loan is used to buy, build or improve the home.
- Throwing away improvement receipts. They lower your gain years later.
Key dates
- January 31
- Form 1098 from your lender.
Questions we hear
Can I deduct mortgage interest on a second home?
Yes, for one second home, within the same $750,000 combined debt limit.
What about property tax?
It counts toward the state and local tax cap together with your state income tax.
General education for TaxSquad clients, not advice for your situation. Rules and figures change. Talk to us before acting on this guide.