Housing-Related Tax Items to Consider
Tax Day is approaching quickly. If you bought, sold, or owned a home in 2025, here are several housing-related tax items to keep in mind as you prepare your filing.
Mortgage Interest Deduction
Homeowners may be able to deduct interest paid on mortgage debt up to:
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$750,000 (or $375,000 if married filing separately) for homes purchased after December 14, 2017
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Up to $1,000,000 for mortgages that closed before December 14, 2017
To claim this deduction, you must itemize your deductions.
State and Local Tax (SALT) Deduction
For 2025 filings, the SALT deduction cap increased to:
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$40,000 for taxpayers with adjusted gross income under $500,000
Previously, the cap was $10,000. This change is especially meaningful for homeowners in areas with higher property taxes.
Itemizing deductions is required to claim this benefit.
Mortgage Insurance Premium (PMI) Deduction
Homeowners may once again deduct mortgage insurance premiums (PMI).
PMI is typically required when a buyer makes a down payment of less than 20%. If you paid PMI in 2025, this deduction may apply to you.
Capital Gains Exclusion on Home Sales
If you sold your home in 2025, you may be able to exclude:
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Up to $500,000 of capital gains if married filing jointly
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Up to $250,000 if single
To qualify, you must have owned and used the home as your primary residence for at least two of the last five years.
Final Thought
These are just a few of the tax considerations that may affect homeowners and sellers. Because tax situations vary, it is always best to consult a qualified tax professional for advice specific to your circumstances.
If you have any real estate-related questions, whether about local market conditions or how broader housing trends may impact your plans, I’m always happy to help.
Ted Duncan
Your Potomac Real Estate Agent
