8 tax deductions for homeowners under the One Big Beautiful Bill

Core Points - The article discusses eight tax breaks for homeowners applicable for the 2026 tax year, emphasizing that these benefits should not be the primary reason for purchasing a home [1][23] Group 1: Mortgage-Related Deductions - The mortgage interest deduction is highlighted as the most recognized tax break, with private mortgage insurance (PMI) payments becoming deductible in 2026 [2][3] - Home equity loans and lines of credit (HELOCs) can also provide tax breaks, but the proceeds must be used for home purchase or improvement, with interest deductions allowed on up to $750,000 of home loan debt [5][6] - Mortgage discount points can be deducted if itemized, with a typical reduction of the mortgage interest rate by 0.25% for each 1% paid in points [7][8] Group 2: Property and Local Taxes - Property taxes can be deducted, with the SALT deduction limit raised to $40,000, benefiting homeowners in high-tax areas [11][12] - Homeowners' association (HOA) fees are generally not deductible, except under specific circumstances related to investment properties or home offices [13] Group 3: Home Improvements and Office Deductions - Significant home improvements that increase market value can adjust the cost basis for capital gains tax purposes, but minor repairs do not qualify [14][15] - Home office expenses can be deducted if the home is used for business, with a simplified method allowing $5 per square foot up to 300 square feet [17][18][19] Group 4: Capital Gains Tax Exclusion - Homeowners can exclude up to $250,000 in capital gains from the sale of a primary residence, or $500,000 for married couples filing jointly, under certain conditions [20][21] Group 5: General Considerations - The article stresses that while tax benefits are important, the primary motivation for buying a home should be lifestyle choices rather than tax advantages [23]