Residential clean energy credit. The residential clean energy credit added a credit for qualified battery storage technology. Battery storage technology costs are allowed for the residential clean energy credit for expenses paid after December 31, 2022.Biomass fuel property costs are no longer allowed for the residential clean energy credit for property placed in service after December 31, 2022. See the Instructions for Form 5695, Residential Energy Credits, for more information.
Energy efficient home improvement credit. The energy efficient home improvement credit is now divided into two sections to differentiate between qualified energy efficiency improvements and residential energy property expenditures. There is no lifetime limit on the amount of the credit. See the Instructions for Form 5695 for more information.
Future developments. For the latest information about developments related to Pub. 530, such as legislation enacted after it was published, go to IRS.gov/Pub530.
Residential energy efficient property credit. The residential energy efficient property credit is now the residential clean energy credit. The credit rate for property placed in service in 2022 through 2032 is 30%.
Energy efficient home improvement credit. The nonbusiness energy property credit is now the energy efficient home improvement credit. The credit is extended to property placed in service after December 31, 2032.
Mortgage insurance premiums. The itemized deduction for mortgage premiums has expired. The deduction doesn’t exist for premiums paid after December 31, 2021.
Home Affordable Modification Program (HAMP). If you benefit from Pay-for-Performance Success Payments, the payments aren’t taxable under HAMP.
Repayment of first-time homebuyer credit. Generally, you must repay any credit you claimed for a home you bought if you bought the home in 2008. See Form 5405 and its instructions for details and for exceptions to the repayment rule.
Home equity loan interest. No matter when the indebtedness was incurred, for tax years beginning in 2018 through 2025, you cannot 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.
Homeowner Assistance Fund. The Homeowner Assistance Fund program (HAF) was established to provide financial assistance to eligible homeowners for purposes of paying certain expenses related to their principal residence to prevent mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services, and also displacements of homeowners experiencing financial hardship after January 21, 2020. If you are a homeowner who received assistance under the HAF, the payments from the HAF program are not considered income to you and you cannot take a deduction or credit for expenditures paid from the HAF program. Rev. Proc. 2021-47 provides an optional method for certain homeowners who itemize their deductions to determine the amount you can deduct for home mortgage interest and state and local real property taxes if you paid the mortgage servicer with your own funds but also received financial assistance from the HAF program described in Rev. Proc. 2021-47. Please note, though Rev. Proc. 2021-47 provides for the possible deduction of home mortgage insurance premiums, you cannot deduct any home mortgage insurance premiums you paid after December 31, 2021. For more details about the HAF program, see Homeowner Assistance Fund. You may use the optional method if you meet the following two requirements.
The optional method allows you to deduct the mortgage interest and state and local real property taxes reported on Form 1098, Mortgage Interest Statement, but only up to the amount you paid from your own sources to the mortgage servicer during the tax year. You are not required to use this optional method to figure your deduction for mortgage interest and state and local real property taxes on your main home.See State and Local Real Estate Taxes and Home Mortgage Interest , later, to determine whether you meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. For more details about the HAF program, see Homeowner Assistance Fund at Treasury.gov/haf. If you received HAF funds from an Indian Tribal Government or an Alaska Native Corporation and want more details about the HAF program, see frequently asked questions (FAQs) at IRS.gov/ITGANCFAQs. . See State and Local Real Estate Taxes and Home Mortgage Interest, later, to determine whether you meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home. .
Extended tax benefit. Certain tax benefits, including the following, that were set to expire have been extended.
Residential energy credits. You may be able to take a credit if you made energy saving improvements to your home located in the United States in 2023. See the Instructions for Form 5695, Residential Energy Credits, for more information.
Mortgage debt forgiveness. You can exclude from gross income any discharges of qualified principal residence indebtedness made after 2006 and in most cases before 2026. You must reduce the basis of your principal residence (but not below zero) by the amount you exclude. See Discharges of qualified principal residence indebtedness , later, and Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), for more information.
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This publication provides tax information for homeowners. Your home may be a house, condominium, cooperative apartment, mobile home, houseboat, or house trailer that contains sleeping space and toilet and cooking facilities.
This publication explains how you treat items such as settlement and closing costs, real estate taxes, sales taxes, home mortgage interest, and repairs.
The following topics are explained.
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To deduct expenses of owning a home, you must file Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Income Tax Return for Seniors, and itemize your deductions on Schedule A (Form 1040). If you itemize, you can’t take the standard deduction.
This section explains what expenses you can deduct as a homeowner. It also points out expenses that you can’t deduct. There are three primary discussions: state and local real estate taxes, sales taxes, and home mortgage interest.
Generally, your real estate taxes and home mortgage interest are included in your house payment.
Your house payment.
If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. Your house payment may include several costs of owning a home. The only costs you can deduct are state and local real estate taxes actually paid to the taxing authority and interest that qualifies as home mortgage interest.These are discussed in more detail later.
Some nondeductible expenses that may be included in your house payment include:
Minister's or military housing allowance.
If you are a minister or a member of the uniformed services and receive a housing allowance that isn’t taxable, you can still deduct your real estate taxes and your home mortgage interest. You don’t have to reduce your deductions by your nontaxable allowance. For more information, see Pub. 517, Social Security and Other Information for Members of the Clergy and Religious Workers, and Pub. 3, Armed Forces' Tax Guide.
Nondeductible payments.
You can’t deduct any of the following items.
Most state and local governments charge an annual tax on the value of real property. This is called a real estate tax. You can deduct the tax if it is assessed uniformly at a like rate on all real property throughout the community. The proceeds must be for general community or governmental purposes and not be a payment for a special privilege granted or special service rendered to you.
. The deduction for state and local taxes, including real estate taxes, is limited to $10,000 ($5,000 if married filing separately). See the Instructions for Schedule A (Form 1040) for more information. .
You can deduct real estate taxes imposed on you. You must have paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year. If you own a cooperative apartment, see Special Rules for Cooperatives , later.
Where to deduct real estate taxes.
Enter the amount of your deductible state and local real estate taxes on Schedule A (Form 1040), line 5b.
Real estate taxes paid at settlement or closing.
Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax year you owned the home. Your share of these taxes is deductible if you itemize your deductions.
Division of real estate taxes.
For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. You (the buyer) are treated as paying the taxes beginning with the date of sale. This applies regardless of the lien dates under local law. Generally, this information is included on the settlement statement you get at closing.
You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. You each can deduct your own share, if you itemize deductions, for the year the property is sold.
Example.
You bought your home on September 1. The property tax year (the period to which the tax relates) in your area is the calendar year. The tax for the year was $730 and was due and paid by the seller on August 15.
You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase). You figure your deduction for real estate taxes on your home as follows.
| 1. | Enter the total real estate taxes for the real property tax year | $730 |
| 2. | Enter the number of days in the property tax year that you owned the property | 122 |
| 3. | Divide line 2 by 365 | 0.3342 |
| 4. | Multiply line 1 by line 3. This is your deduction. Enter it on Schedule A (Form 1040), line 5b | $244 |
You can deduct $244 on your return for the year if you itemize your deductions. You are considered to have paid this amount and can deduct it on your return even if, under the contract, you didn’t have to reimburse the seller.
Delinquent taxes.
Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. If you agree to pay delinquent taxes when you buy your home, you can’t deduct them. You treat them as part of the cost of your home. See Real estate taxes , later, under Basis .
Escrow accounts.
Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. You may not be able to deduct the total you pay into the escrow account. You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing authority. Your real estate tax bill will show this amount.
Refund or rebate of real estate taxes.
If you receive a refund or rebate of real estate taxes this year for amounts you paid this year, you must reduce your real estate tax deduction by the amount refunded to you. If the refund or rebate was for real estate taxes paid for a prior year, you may have to include some or all of the refund in your income. For more information, see Recoveries in Pub. 525.
The following items aren’t deductible as real estate taxes.
Charges for services.
An itemized charge for services to specific property or people isn’t a tax, even if the charge is paid to the taxing authority. You can’t deduct the charge as a real estate tax if it is:
. You must look at your real estate tax bill to decide if any nondeductible itemized charges, such as those listed above, are included in the bill. If your taxing authority (or lender) doesn’t furnish you a copy of your real estate tax bill, ask for it. Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. .
Assessments for local benefits.
You can’t deduct amounts you pay for local benefits that tend to increase the value of your property. Local benefits include the construction of streets, sidewalks, or water and sewer systems. You must add these amounts to the basis of your property.
You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. An example is a charge to repair an existing sidewalk and any interest included in that charge.
If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. If you can’t show what part of the assessment is for maintenance, repair, or interest charges, you can’t deduct any of it.
An assessment for a local benefit may be listed as an item in your real estate tax bill. If so, use the rules in this section to find how much of it, if any, you can deduct.
Transfer taxes (or stamp taxes).
You can't deduct transfer taxes and similar taxes and charges on the sale of a personal home. If you are the buyer and you pay them, include them in the cost basis of the property. If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale.
Homeowners’ association assessments.
You can't deduct these assessments because the homeowners’ association, rather than a state or local government, imposes them.
Foreign taxes you paid on real estate.
You can't deduct foreign taxes you paid on real estate.