Home Tax Deduction Checklist: 2023 Edition

Want to put money back in your pocket when filing your 2022 tax returns?

Everest rounds up the latest tax breaks for homeowners—so you don’t have to!

March is here—and Uncle Sam is at it again.

Tuesday, April 18th is just around the corner, which means Americans everywhere are scrambling to file their 2022 tax returns. Things were laidback the past few years with generous pandemic extensions. But with the typical tax timeline restored, Everest is getting ahead of the big deadline.

Save on the date!

Tax season is a source of stress for virtually everyone. But for homeowners, this is a great time to practice savvy strategy and secure a boatload of savings (if you file correctly!).

Because the tax code is ever-changing, it’s important to research the latest deductions, credits, and other worthwhile write-offs for single and joint filers. We’re only covering the federal side of the coin, so be sure to check for breaks at the state and local level.

And it goes without saying, a licensed CPA can help you with all kinds of tax strategy. For now, we’re interested in all the money-saving perks connected to your home and property.

Let’s go save!

Start with the standard

First, remember that itemizing your home-related expenses may not make a difference if the standard deduction is higher. For 2022, the number increased a couple of hundred dollars to $12,950 (for individuals) and $25,900 (for married couples filing jointly).

Still, it’s well worth it to check—especially if you’re a mortgage holder.

Begin your filing journey with our complete list of homeowner’s tax breaks below. Sadly, there’s a few perks going away. We’ll let you know about those too.

Oh, and whatever you do—don’t miss the deadline!

Tax Breaks for Homeowners, 2023 Edition

For filing your 2022 federal return

Property taxes

Although property taxes are no longer fully deductible, you can still write them off with a $10,000 cap for combined property taxes, state, and local income taxes paid. In states with no income tax, sales tax is deductible.

For people who own a rental or vacation home, you can include your state income tax plus deductions for all your properties.

Mortgage interest

If you took on a loan after December 15, 2017, the feds allow you to deduct interest paid on the first $750,000 (down from $1,000,000 in years prior). Since mortgages have you paying more interest in the early years, this is a great deduction for new homeowners.

Keep in mind: the write-off only works if you itemize, so standard filers can’t take advantage.

Mortgage points

If paid mortgage points in an effort to reduce your interest rate, kudos to you! Just like interest paid, the IRS lets you deduct discount points (not origination points).

Here’s an example from Audrey Ference of Realtor.com: “Each point is 1% of the loan amount, so if you paid 2 points on a $300,000 loan, you can deduct $6,000.”

Private mortgage insurance

Sorry to get your hopes up! Despite a temporary reprieve last year, the federal government no longer allows you to deduct PMI (private mortgage insurance).

We’ll keep close watch to see if this perk returns next year.

Home equity debt interest

Have you recently taken out a home equity loan or something similar? Years back, interest related to these kinds of loans was deductible up to $100,000 for married couples.

The bad news? The IRS has scaled back this benefit to include ONLY home equity debt used for home improvement purposes. The good news? You can write off all eligible loans regardless of date as long as they do not exceed the cap of $750,000 (mortgage + home equity loan amount).

Energy-efficient upgrades

Environmentalists rejoice! The popular energy-efficiency tax credit is here to stay. Examples include purchase and installation of solar panels, solar water heaters, new exterior windows, special insulation, and other home upgrades. Through January 1, 2023, you can reduce your tax bill up to $1,200 a year per property.

Don’t forget to keep your paperwork. Some installations provide a lifetime credit, while others may be deducted for up to 30% total cost.

Home office deduction

If you’re self-employed or run a business out of your home, dedicated office space is a totally legitimate deduction (despite the common misconception!). Just be careful. If you’re a W-2 worker with an office elsewhere, the IRS says no break for you.

The simplified calculation for this benefit offers $5 per square foot up to a maximum 300 sq/ft. So, a humble 250 sq/ft home office nets you a generous $1,250 deduction. Make sure to use this room solely for work. In other words, the desk can stay; the guest bed must go.

Everest says: our clients excel at tax time

2022 tax returns are due April 18th!

Want to lock in some lucrative home credits for next year?

Reach out to a loan officer today to fund something new!