Year-End Homeowner Tax Tips (Before You File Your 2025 Return)

One of the biggest benefits of owning a home is the mortgage interest deduction. This means you can subtract the interest you paid on your home loan from your taxes.

Your mortgage company will send you a Form 1098 in January. This form shows how much interest you paid during the year. Keep this form in a safe place! You’ll need it when you do your taxes.

If you bought your home in 2025, you might have paid interest at closing too. Make sure to include that amount. Check your closing documents to find this number.

Property taxes are another deduction for homeowners. These are the taxes you pay to your city or county for owning your home.

You can deduct up to $10,000 in property taxes each year. If you’re married and file separately, the limit is $5,000 each. This limit includes both property taxes and state income taxes combined.

If you pay your property taxes through your mortgage payment (in escrow), your lender handles this for you. The amount you actually paid will show up on your Form 1098. If you pay property taxes directly to your county, keep those receipts!

Do you work from home? You might be able to deduct some of your home expenses.

If you’re self-employed and use part of your home just for work, you could qualify. The space must be used regularly and only for business. A corner of your bedroom where you sometimes work doesn’t count. But a spare room that’s set up as an office might qualify.

You can deduct a portion of your mortgage interest, property taxes, utilities, and home repairs. The amount depends on how much of your home you use for work.

If you’re an employee who works from home, the rules are different. Right now, employees can’t take this deduction. But if you’re self-employed or own a business, this can really help.

Did you make your home more energy efficient this year? You might get money back on your taxes!

There are tax credits for things like:

• Solar panels
• Solar water heaters
• Wind turbines
• Geothermal heat pumps
• Fuel cells
• Energy-efficient windows and doors
• Insulation
• Heat pumps
• Central air conditioning

Some of these improvements can give you a credit of 30% of what you spent. That’s a big savings! Keep all your receipts and invoices. You’ll need proof of what you bought and when you installed it.

When you got your mortgage, you might have paid “points” to lower your interest rate. Each point equals 1% of your loan amount.

If you bought your main home in 2025, you can usually deduct the full amount of points you paid this year. If you refinanced your home, you have to spread out the deduction over the life of the loan.

Check your closing papers or Form 1098 to see if you paid points. This deduction can add up to real savings.

Do you have a home equity loan or line of credit? The interest might be deductible, but only if you used the money to buy, build, or improve your home.

If you used the money to pay off credit cards or buy a car, you can’t deduct the interest. Keep records showing what you spent the money on. This helps if the IRS asks questions later.

Some home improvements for medical reasons might be deductible. These could include:

• Installing ramps
• Widening doorways for wheelchair access
• Adding railings or grab bars
• Lowering kitchen cabinets

You can only deduct medical expenses that are more than 7.5% of your income. But if you have large medical costs, these improvements might help you reach that amount.

If you’re in the military and moved because of orders, you can deduct moving expenses. This includes the cost of moving your belongings and traveling to your new home.

For most other people, moving expenses are not deductible right now. But military members still get this benefit.

Here’s what you should do before December 31:

Find these documents:

• Closing papers from buying or refinancing your home
• Property tax bills and payment receipts
• Receipts for energy-efficient improvements
• Home office records if you’re self-employed
• Medical improvement receipts and invoices

Make a file: Put all these papers in one place. When tax time comes, you’ll be ready. Nothing is worse than searching for papers in April!

Consider paying early: If you want a bigger deduction this year, you could pay your January property tax bill in December. Or make your January mortgage payment before the end of the year. Just make sure the payment counts for 2025.

Should You Itemize?

Here’s an important question: Should you itemize deductions or take the standard deduction?

The standard deduction for 2025 is $15,000 for single people and $30,000 for married couples filing together. If your total deductions (mortgage interest, property taxes, charity, medical expenses) are more than the standard deduction, itemize! If not, take the standard deduction.

Many homeowners find that itemizing saves them more money. A tax professional can help you figure out which is better for you.

Talk to a Tax Professional

Tax rules can be tricky. They also change from year to year. What worked last year might be different this year.

Consider talking to a tax professional or accountant. They know the latest rules and can make sure you get every deduction you deserve. The money you spend on tax help could save you much more in the long run.

Final Thoughts

Owning a home is a big responsibility, but it comes with real tax benefits. Take some time before the year ends to gather your papers and understand your deductions. A little work now can mean more money in your pocket when you file your return.

At DSLD Mortgage, we’re here to help you understand all parts of homeownership. Smart planning today leads to savings tomorrow. Here’s to a happy new year and a healthy tax return!