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2025 Tax Season: What Homeowners Can Deduct, Credit, and How to Make the Most of It

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  Published in House and Home on Thursday, December 11th 2025 at 15:06 GMT by CNET

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Homeowners and the 2025 Tax Year: What You Can Deduct, Credit, and How to Make the Most of It

The 2025 tax season is fast approaching, and for homeowners it brings a handful of important changes that can trim the amount you owe. The CNET article “Homeowners: Income, Taxes, Credits, Deductions – 2025” provides a clear‑cut guide to the key deductions and credits that apply to those who own a house, whether it’s their primary residence, a second home, or even a rental property. Below is a comprehensive, 600‑plus‑word summary of the article’s main points, with links to the IRS resources that back up each claim.

1. The Standard Deduction – A First‑Step Savings

For 2025 the standard deduction has been bumped up modestly:

If your itemized deductions (mortgage interest, state & local taxes, charitable gifts, etc.) total less than these amounts, you’ll likely opt for the standard deduction. The article emphasizes that the new amounts are a slight improvement over 2024’s figures, which is especially useful for those who had to “just scrape together” to reach the threshold last year.

Resource: [ IRS Standard Deduction Amounts – 2025 ]

2. Mortgage Interest: Still the Big Player

Eligible Mortgage Interest

• Primary & Secondary Homes – You may deduct interest paid on up to $750,000 of mortgage debt (or $375,000 if married filing separately).
• First‑Time Homebuyers – If you’re buying a first home, the limit is $750,000 regardless of filing status, but you can only claim interest on the loan portion used to buy or improve the home, not for other personal expenses.

Mortgage Refinances

• Refinancing the mortgage does qualify for deduction provided the new loan meets the above limits and you’re still using the home as your primary residence.

Mortgage Points

• Points you paid to secure the mortgage are deductible in the year paid if the points were specifically for the loan. For example, if you paid 2.5% of the loan amount to get a lower interest rate, you can claim that as interest.

Key Caveat: If you’re borrowing through a home equity loan or line of credit and you’re using the money for non‑home improvement purposes (like investing in stocks), the interest may not be fully deductible.

Resource: [ IRS Publication 936 – Home Mortgage Interest Deduction ]

3. Property Taxes and the SALT Cap

State and Local Taxes (SALT) are deductible, but the total amount of state income taxes plus property taxes plus sales taxes you can claim is capped at $10,000 ($5,000 if married filing separately).

• Homeowners’ Property Tax – Even if your property tax bill is well above $10,000, you’ll only be able to deduct up to the cap.
• Record Keeping – Keep a copy of your property tax bill or mortgage statement to prove the amount you paid.

The article underscores that many taxpayers still exceed the cap, so they’re essentially “sacrificing” part of their local taxes in exchange for federal savings.

Resource: [ IRS Publication 502 – Medical and Dental Expenses – includes SALT Cap ]

4. Home Office Deduction

If you work from home regularly and exclusively for business, you can deduct a portion of your home expenses:

• Simplified Option – $5 per square foot of the office space, up to 300 sq ft (maximum $1,500).
• Regular Method – Actual expenses (mortgage interest, property taxes, utilities, insurance) divided by the total square footage of the home.

The article notes that you’ll need to file Schedule C (Profit or Loss from Business) and Schedule A (Itemized Deductions) if you use the regular method.

5. Energy‑Efficiency Credits – A Quick‑Start Guide

The federal government rewards homeowners who invest in renewable and energy‑efficient upgrades. The article lists the most relevant 2025 credits:

Important Notes: - The solar ITC dropped from 26% in 2024 to 22% in 2025 and will stay at 22% through 2032 before declining further.
- Only systems installed in 2025 qualify; it doesn’t matter if the equipment was bought earlier.
- Claiming the Credit – Complete Form 5695 (Residential Energy Credits) and attach it to your Form 1040.

Resources: - [ IRS Residential Energy Efficient Property Credit ] - [ IRS Form 5695 – Residential Energy Credits ]

6. Charitable Contributions & Other Itemized Deductions

Beyond mortgage interest and property taxes, you can also itemize:

• Cash & Non‑Cash Charitable Gifts – Deduct up to 100% of your adjusted gross income for cash donations to qualified charities.
• Medical and Dental Expenses – Deductable to the extent they exceed 7.5% of your AGI.
• Investment Interest – If you have investment accounts, interest paid on investment loans is deductible up to the amount of net investment income.

The article reminds readers to keep receipts, bank statements, and any relevant documentation to back up these deductions.

7. Capital Gains on Home Sales

If you sell your primary residence and meet the “ownership and use” test (owned and lived in the home for at least 2 of the last 5 years), you can exclude up to $250,000 of capital gains (or $500,000 for married couples filing jointly).

• Adjusting Basis – Home improvements (e.g., a new kitchen or roof) add to your cost basis, reducing taxable gains.
• Selling a Rental – If you own a rental property, you’ll need to file a Schedule D (Capital Gains) and possibly report depreciation recapture on Form 4797.

Resource: [ IRS Publication 523 – Selling Your Home ]

8. A Checklist Before You File

1. Decide Between Standard or Itemized – Compare totals.
2. Collect Mortgage Documents – 1098 forms, loan statements.
3. Gather Property Tax Bills – For the year.
4. Document Energy Upgrades – Receipts, contractor invoices, and energy audit reports.
5. Track Charitable Donations – Receipts, acknowledgement letters.
6. Keep Home Office Records – Lease agreements, utility bills, square footage calculations.
7. Use the IRS Tax Withholding Estimator – Adjust withholding to avoid penalties.

The article recommends consulting a tax professional if your situation is complex—particularly if you’re dealing with rental income, multiple properties, or significant home‑equity loan activity.

9. Final Takeaway

Homeowners in 2025 can still tap into a solid arsenal of tax deductions and credits that reduce the bottom line:

• Mortgage interest and property taxes (within the $10,000 SALT cap).
• Home office – a small but potent deduction for remote workers.
• Energy credits – 22% for solar PV and 20% for heat pumps, insulation, etc.
• Charitable giving and other itemized deductions – if they exceed the standard deduction.
• Capital gains exclusions – up to $250k/$500k on primary residences.

Being organized, keeping meticulous records, and knowing where the IRS allows you to claim deductions will help you maximize savings. The article’s links to IRS publications serve as a handy roadmap, ensuring you’re not missing out on any valuable credits or making mistakes that could trigger an audit.

Happy filing!