Homeowner Tax Deductions
What Parts of My House Payment Are Tax Deductible?
Owning a home comes with many financial responsibilities, but it may also provide tax benefits depending on your individual circumstances. While not every homeowner qualifies for every deduction, understanding what's available can help you prepare for tax season.
Mortgage Interest Deduction
When you make your mortgage payments, you may be surprised by how much of your payment goes toward interest. The good news is that if you itemize deductions and meet IRS requirements, you may be able to deduct qualified mortgage interest paid during the year.
After the end of the tax year, your mortgage lender will send you Form 1098, which reports the amount of mortgage interest you paid. Consult a qualified tax professional to determine whether you're eligible for the deduction.
Property Taxes
Property taxes can be a significant part of homeownership expenses, and you may be able to deduct eligible property taxes when filing your federal tax return if you itemize deductions.
If you have an escrow account, your property taxes are included in your monthly mortgage payment and the amount paid during the year is generally reflected on your Form 1098. If you pay your property taxes directly, keep records of your tax bills and payments for your files.
Because deduction limits and tax laws can change over time, consult current IRS guidance or a qualified tax professional to understand what deductions may apply for the tax year you're filing.
Private Mortgage Insurance (PMI)
Private mortgage insurance is typically required when you purchase a home with a conventional loan and put less than 20% down. PMI protects the lender, but in some cases, it may also provide a tax benefit.
If allowed under current federal tax law, eligible borrowers who itemize deductions may be able to deduct qualified mortgage insurance premiums. Consult current IRS guidance or a qualified tax professional to determine whether this deduction applies to your situation.
Home Office Deduction
If you're self-employed, an independent contractor, a sole proprietor or another eligible business owner, you may qualify for a home office deduction.
The IRS offers a simplified method that allows eligible taxpayers to deduct $5 per square foot of dedicated office space, up to 300 square feet, for a maximum deduction of $1,500. Another option is deducting a portion of qualifying home expenses based on the percentage of your home used exclusively for business purposes.
Keep in mind that employees who work remotely generally are not eligible for the federal home office deduction under current tax law.
As with any tax deduction, consult a qualified tax professional to determine whether you qualify.
Keep Good Records Throughout the Year
Whether you're claiming mortgage interest, property taxes or another homeowner-related deduction, maintaining organized records can make tax preparation easier.
Consider keeping:
- Form 1098 from your mortgage lender
- Annual property tax statements
- Records of mortgage insurance payments, if applicable
- Documentation related to qualifying home office expenses
- Any additional tax documents provided by your lender or tax professional
Having these documents readily available can help ensure you're prepared when it's time to file your taxes.
If you're considering homeownership in the future, our mortgage affordability calculator can help you estimate how much home you can afford.
Important: Tax laws change periodically and every taxpayer's situation is unique. Georgia United Credit Union does not provide tax advice. Please consult a qualified tax professional or the IRS regarding your individual tax situation.
Content provided for informational purposes only and should not be interpreted as tax or legal advice.