Homeowner Tax Deductions Explained: Mortgage Interest, Property Taxes, Points and PMI

Homeowner Tax Deductions Explained: Mortgage Interest, Property Taxes, Points and PMI

By Ahmad Dogar
FitCreeper Finance · Published October 2026 · Educational only — not personalized financial, legal, or tax advice

How this article was made: Drafted with AI assistance, then checked line by line against the primary sources listed at the end of this page (IRS Publications 530 and 936 (including the draft 2026 Publication 936), IRS Tax Topics 501, 503, 504, 505 and 701, and the IRS 2026 inflation adjustment announcement), fetched on October 16, 2026. Worked examples use simple illustrative numbers, not real accounts. Rules, policy wording, and state laws change, so re-check the linked sources and your own documents before you act.

Buying a home is often described as a tax break. The reality is more nuanced. Several federal deductions are available to homeowners, but most of them only help if you itemize, and the rules have changed several times in recent years. Mortgage insurance premiums are a good example: the IRS says they could not be deducted on 2025 returns, but its draft 2026 guidance says the deduction is back for 2026.

This guide walks through the main federal tax rules for homeowners using IRS publications: when itemizing makes sense, the mortgage interest deduction and its debt limits, property taxes and the state and local tax (SALT) cap, points, mortgage insurance premiums, costs you cannot deduct, and the home sale exclusion. It is general education, not tax advice, and state income tax rules are not covered.

The main tax breaks for homeowners

Main federal tax breaks for homeowners from IRS guidance: home mortgage interest, state and local real estate taxes within the SALT cap, qualifying points, qualified mortgage insurance premiums for 2026, and the home sale gain exclusion.

IRS Publication 530, Tax Information for Homeowners, is the starting point. The main federal items are:

  • Home mortgage interest, deducted on Schedule A, subject to limits explained in Publication 936.
  • State and local real estate taxes, deducted on Schedule A, subject to the SALT limit.
  • Points, which may be deductible as mortgage interest, either in the year paid or over the life of the loan.
  • Mortgage insurance premiums, which the IRS's draft 2026 Publication 936 says have been reinstated for tax year 2026.
  • The home sale exclusion, which lets many owners exclude part or all of the gain when they sell their main home.

Publication 530 also covers the mortgage interest credit for people who receive a qualified Mortgage Credit Certificate (MCC) from a state or local government, generally issued "only in connection with a new mortgage for the purchase of your main home."

First question: will you itemize?

Standard deduction versus itemizing for homeowners: homeowner deductions only help if your total itemized deductions are greater than your standard deduction, which for 2026 is 16,100 dollars single, 24,150 head of household and 32,200 married filing jointly.

The mortgage interest, real estate tax, points and mortgage insurance deductions are itemized deductions on Schedule A. IRS Topic 501 says you should itemize "if the total amount of your allowable itemized deductions is greater than your standard deduction." If your itemized total is smaller, you take the standard deduction and the homeowner deductions do not change your tax.

According to the IRS 2026 inflation adjustments, the standard deduction for tax year 2026 is $32,200 for married couples filing jointly, $16,100 for single filers and married individuals filing separately, and $24,150 for heads of household.

Illustrative example (made-up numbers): A married couple filing jointly in 2026 pays $14,000 of mortgage interest, $6,000 of property taxes and $3,000 of state income tax, and gives $2,000 to charity. Their itemized total is about $25,000, below the $32,200 standard deduction, so itemizing would not help them. A couple with $24,000 of interest and the same other items would total about $35,000 and might benefit. Your own numbers, and limits discussed below, decide the answer.

The mortgage interest deduction

Mortgage interest debt limits from IRS Publication 936: 750,000 dollars of home acquisition debt for loans after December 15, 2017, 375,000 dollars if married filing separately, and 1,000,000 dollars for older grandfathered debt.

Publication 936 explains that "home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home)." The key limits:

  • Loans after December 15, 2017: you can deduct interest "on the first $750,000 ($375,000 if married filing separately) of indebtedness."
  • Older loans: "higher limitations ($1 million ($500,000 if married filing separately)) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017."
  • Combined limit: the dollar limits apply to the combined mortgages on your main home and second home.
  • Home equity debt: "no matter when the indebtedness was incurred, you can no longer deduct the interest from a loan secured by your home to the extent the loan proceeds weren't used to buy, build, or substantially improve your home."

The draft 2026 Publication 936 shows the same $750,000 and $1 million limits for 2026 returns. Publication 936 adds that "in most cases, you can deduct all of your home mortgage interest," because most mortgages fall within these limits.

Your lender reports what you paid. Publication 936 says that if you paid $600 or more of mortgage interest during the year on any one mortgage, you will generally receive Form 1098, which shows interest, mortgage insurance premiums and deductible points. To understand how much of each payment is interest, see our guide to how mortgages work.

IRS Topic 505 notes that qualified mortgage interest, including points if you are the buyer, is among the types of interest deductible as itemized deductions.

Property taxes and the SALT cap

State and local tax deduction rules from IRS Topic 503: a combined limit of 40,000 dollars or 20,000 dollars if married filing separately, a modified adjusted gross income limitation, and the limit is not reduced below 10,000 dollars; HOA fees and transfer taxes are not deductible.

Real estate taxes go on Schedule A, line 5b, according to Publication 530. IRS Topic 503 explains the overall limit: your deduction for state and local taxes is "limited to a combined total deduction of $40,000 ($20,000 if married filing separately) subject to a modified adjusted gross income limitation but not reduced below $10,000." That combined limit covers property taxes plus state and local income (or sales) taxes together, so check the current-year Schedule A instructions when you file.

Two practical rules from Publication 530:

  • Escrow: "You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority." What you paid into escrow may differ. See our guide to mortgage escrow accounts.
  • Closing: real estate taxes are generally divided between buyer and seller for the part of the year each owned the home, and "your share of these taxes is deductible if you itemize."

Some charges on a tax bill are not deductible real estate taxes. Topic 503 lists items such as transfer taxes, stamp taxes and homeowners' association fees as nondeductible, and Publication 530 says you can't deduct HOA assessments "because the homeowners' association, rather than a state or local government, imposes them."

Deducting mortgage points

Simplified IRS tests for deducting points in the year paid: loan secured by your main home, points are customary in the area, amount is typical, you provided at least that much cash at closing, and the loan bought or built your main home.

Points are prepaid interest paid to lower your rate. IRS Topic 504 says that "in general, points to obtain a new mortgage, to refinance an existing mortgage, or paid on loans secured by your second home are deducted ratably over the term of the loan." The main exception is points on a loan to buy or build your main home, which you may deduct in full in the year paid if you meet all the tests in Publication 936, including:

  1. The loan is secured by your main home.
  2. Paying points is an established business practice where the loan was made.
  3. The points were not more than generally charged in that area.
  4. You use the cash method of accounting (most individuals do).
  5. The points were not paid in place of separately stated costs like appraisal, inspection, title or attorney fees, or property taxes.
  6. The funds you provided at or before closing, plus any seller-paid points, were at least as much as the points charged, and you did not borrow those funds from the lender or broker.
  7. You used the loan to buy or build your main home, and the points were figured as a percentage of the loan principal.

Seller-paid points can count too: Topic 504 says they are "treated as paid directly by you from unborrowed funds," provided you subtract them from your home's basis. For the math on whether points pay off at all, see mortgage points explained.

Mortgage insurance premiums: expired for 2025, back for 2026

Mortgage insurance premium deduction timeline from IRS publications: expired and not claimable for 2025 per Publication 936 for 2025, reinstated for tax year 2026 per the draft 2026 Publication 936, with a phaseout above 100,000 dollars of AGI and no deduction above 109,000 dollars.

This is the rule most likely to confuse homeowners this year. The final 2025 Publication 936 states: "The itemized deduction for mortgage insurance premiums has expired. You can no longer claim the deduction." But the IRS's draft 2026 Publication 936 says "the itemized deduction for qualified mortgage insurance premiums has been reinstated for tax year 2026," claimed on line 8d of Schedule A for amounts paid or accrued in 2026.

The draft also describes an income phaseout. If your AGI is more than $100,000 ($50,000 if married filing separately), the deductible amount "is limited and may be eliminated," and if your AGI is more than $109,000 ($54,500 if married filing separately), you can't deduct your mortgage insurance premiums. The insurance must be connected with home acquisition debt secured by a first or second home.

Because this comes from a draft publication, confirm the final 2026 version before filing. To understand PMI itself, including how to remove it, see what PMI is and how to remove it.

Homeowner costs you can't deduct

Homeowner costs you cannot deduct according to IRS Publication 530: homeowners and title insurance, utilities, internet, repairs, HOA or condo fees, depreciation, domestic help wages, and most settlement costs.

Publication 530 lists nondeductible payments, including:

  • "Insurance, including fire and comprehensive coverage, and title insurance."
  • Wages you pay for domestic help.
  • Depreciation.
  • "The cost of utilities, such as gas, electricity, or water."
  • Most settlement costs.
  • Forfeited deposits, down payments, or earnest money.
  • Internet or wifi service.
  • Homeowners association fees, condominium association fees, or common charges.
  • Repairs to your home.

Many settlement costs that are not deductible can instead be added to your home's basis, which matters when you sell. Publication 530 covers basis rules, including items added to basis and the difference between repairs and improvements. Keep closing documents and improvement receipts for as long as you own the home.

Selling your home: the gain exclusion

When you sell, IRS Topic 701 explains that if you have a capital gain from the sale of your main home, "you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse." To qualify you generally must meet both an ownership test and a use test. Publication 523 has the full rules and worksheets.

This is one reason basis records matter: improvements and certain closing costs added to basis reduce your gain.

A year-end homeowner tax checklist

  1. Gather Form 1098 from each lender and check interest, points and mortgage insurance figures.
  2. Pull your property tax bill or escrow statement to see what was actually paid to the taxing authority.
  3. Total your itemized deductions and compare with your standard deduction.
  4. Check the SALT limit and income limits in the current Schedule A instructions.
  5. Keep closing and improvement records for basis.
  6. Use the final IRS publications for the year you file, and consider a tax professional for complex situations such as rentals, home offices or large refinances.

FAQ

Is mortgage interest tax deductible in 2026?

Yes, if you itemize. Interest on up to $750,000 of home acquisition debt ($375,000 if married filing separately) is deductible for loans after December 15, 2017; older loans use $1 million (IRS Pub. 936).

Can I deduct PMI on my taxes?

Not for 2025, per the final 2025 Pub. 936. For 2026, the IRS's draft 2026 Pub. 936 says the deduction is reinstated, with a phaseout above $100,000 AGI ($50,000 MFS).

Are property taxes deductible?

Yes, as itemized deductions within the SALT limit of $40,000 ($20,000 MFS), subject to an income limitation but not below $10,000 (IRS Topic 503).

Is homeowners insurance tax deductible?

No for a personal residence. Publication 530 lists homeowners and title insurance as nondeductible.

Can I deduct points on a refinance?

Generally over the life of the loan, not all at once, according to IRS Topic 504.

Is it worth itemizing as a homeowner?

Only if your itemized deductions exceed your standard deduction, which for 2026 is $32,200 for joint filers and $16,100 for single filers (IRS).

Are HOA fees tax deductible?

Not for your own home. Publication 530 says HOA assessments aren't deductible because the association, not a government, imposes them.

Sources

Educational disclaimer: This article is general U.S. consumer-finance education, not tax, legal, or financial advice. FitCreeper Finance is not a tax preparer, assessor, or attorney, and does not receive pay from companies mentioned here. Tax law, IRS limits, and state and local property-tax rules change and vary by location; confirm details with the official sources linked above, your local assessor or tax office, and, for your situation, a qualified tax professional. Questions or corrections: fryntavo@gmail.com.