What are the most common itemized deductions available to homeowners?
Ask Blue J any tax question, then go deeper. Follow up, add client-specific context, and explore the sources behind every answer with Blue J’s generative AI solution for tax research.
The most common itemized deductions available to homeowners are:
1. Home Mortgage Interest
- Deductibility: Homeowners can deduct interest paid on a loan secured by their main home or a second home, provided the loan is used to buy, build, or substantially improve the home.
- Limits: For acquisition indebtedness incurred after October 13, 1987 and before December 16, 2017, the deduction is limited to interest on up to $1,000,000 ($500,000 if married filing separately). For debt incurred after December 15, 2017, the limit is $750,000 ($375,000 if married filing separately). These limits are permanent as of 2025.
- Home Equity Loans: Interest on home equity loans is only deductible if the proceeds are used to buy, build, or substantially improve the home securing the loan.
- Mortgage Insurance Premiums: For tax years beginning after December 31, 2025, mortgage insurance premiums are treated as interest and are deductible as qualified residence interest.
- Reporting: Deductible mortgage interest and points reported on Form 1098 are entered on Schedule A (Form 1040), line 8a. If not reported on Form 1098, they are entered on line 8b or 8c.
2. State and Local Taxes (SALT)
- Deductibility: State and local real estate taxes, and either state and local income taxes or general sales taxes, are deductible.
- SALT Cap: For 2025, the deduction is capped at $40,000 ($20,000 if married filing separately), with a phase-out for higher incomes. The cap is indexed for inflation through 2029, after which it reverts to $10,000 ($5,000 MFS).
- Phase-Out: For 2025, the cap is reduced by 30% of the amount by which modified adjusted gross income (MAGI) exceeds $500,000 ($250,000 MFS), but not below $10,000 ($5,000 MFS).
3. Points Paid on a Mortgage
- Deductibility: Points paid to obtain a mortgage may be deductible in the year paid if certain requirements are met (e.g., the loan is for the purchase or substantial improvement of the main home, and paying points is an established business practice in the area).
- If Not Fully Deductible: Points not meeting all requirements must be deducted over the life of the loan.
4. Casualty and Theft Losses
- Deductibility: Losses from federally or state-declared disasters are deductible, subject to a $100 reduction per event and a further reduction of 10% of the taxpayer’s AGI.
- Limitation: Only losses attributable to federally or state-declared disasters are deductible; this rule is now permanent.
5. Charitable Contributions
- Deductibility: Cash and non-cash contributions to qualified organizations are deductible, subject to AGI limitations (generally 60% for cash to public charities, 30% for property or gifts to certain organizations).
- Floor: Only contributions exceeding 0.5% of AGI are deductible, with carryforward rules for excess contributions.
- Above-the-Line Deduction: Non-itemizers may deduct up to $1,000 ($2,000 joint) for cash contributions to qualified organizations.
6. Medical Expenses
- Deductibility: Medical expenses are deductible to the extent they exceed 7.5% of AGI.
- Eligible Expenses: Includes unreimbursed payments for medical care, prescription drugs, and certain insurance premiums.
7. Other Less Common Deductions
- Investment Interest: Deductible to the extent of net investment income.
- Unreimbursed Employee Expenses: Only deductible for certain employees and subject to a 2% AGI floor (if not suspended).
- Miscellaneous Deductions: Most miscellaneous itemized deductions are suspended, except for certain educator expenses and impairment-related work expenses.
8. Key Considerations
- Standard Deduction: Taxpayers may only benefit from itemizing if their total itemized deductions exceed the standard deduction ($15,750 for singles, $23,625 for heads of household in 2025).
- Phase-Outs and Floors: High-income taxpayers may see their itemized deductions reduced due to phase-outs or floors on certain deductions.
- Recordkeeping: Homeowners should keep records of mortgage interest, property taxes, points, casualty losses, and charitable contributions to substantiate deductions.
9. Summary Table of Most Common Itemized Deductions for Homeowners:
- Home mortgage interest (including mortgage insurance premiums after 2025)
- State and local taxes (SALT), subject to cap and phase-out
- Points paid on a mortgage
- Casualty and theft losses (federally or state-declared disasters only)
- Charitable contributions (subject to AGI limits and floors)
- Medical expenses (exceeding 7.5% of AGI)
These deductions are generally reported on Schedule A (Form 1040).
Was this answer helpful?
What Blue J customers are saying
“We are excited to use Blue J to elevate the initial work product our team is able to produce."
"We’re incorporating Blue J to ensure our people are well-equipped with a research tool that delivers on both ease of use and quality of deliverable. It will save us a lot of time as a starting point, so we can focus our efforts on the analysis. Ultimately, it helps us get to the right answer, faster.”
"We’re incorporating Blue J to ensure our people are well-equipped with a research tool that delivers on both ease of use and quality of deliverable. It will save us a lot of time as a starting point, so we can focus our efforts on the analysis. Ultimately, it helps us get to the right answer, faster.”
"We had used Checkpoint for a long time but found it wasn’t particularly well-used in our practice."
"A lot of our practitioners would have to turn to Google to find what they were looking for, which of course isn’t ideal. Blue J is a real game-changer when it comes to this, since it combines the efficiency of Google with the authoritative tax materials our people really need to serve their clients best. At ELO, we pride ourselves on providing services that are focused on value for clients and exceeding their expectations. Adding Blue J to our toolbox will enable us to do just that, as we continue to evolve our service offerings to better serve our clients’ needs.”
"A lot of our practitioners would have to turn to Google to find what they were looking for, which of course isn’t ideal. Blue J is a real game-changer when it comes to this, since it combines the efficiency of Google with the authoritative tax materials our people really need to serve their clients best. At ELO, we pride ourselves on providing services that are focused on value for clients and exceeding their expectations. Adding Blue J to our toolbox will enable us to do just that, as we continue to evolve our service offerings to better serve our clients’ needs.”
"We find this tool to be a game-changer for us and our clients.”
“We had the opportunity to pilot some other AI solutions in the market, and found that the improvement over traditional search was limited - except in Blue J’s case, where the efficiency gain over traditional research methods is significant."
“We had the opportunity to pilot some other AI solutions in the market, and found that the improvement over traditional search was limited - except in Blue J’s case, where the efficiency gain over traditional research methods is significant."
“Blue J is an exciting technology because it enables the practitioner to remain in the driver’s seat of the analysis."
"Thoughtful functions are included to encourage and facilitate deeper analysis, not to replace or reduce it. We’ll continue to find new and impactful ways to leverage the technology, which has benefited our clients and staff alike. At RSM we strive to be compelling to our clients and to be digital by embracing new technologies to fulfill that promise.”
"Thoughtful functions are included to encourage and facilitate deeper analysis, not to replace or reduce it. We’ll continue to find new and impactful ways to leverage the technology, which has benefited our clients and staff alike. At RSM we strive to be compelling to our clients and to be digital by embracing new technologies to fulfill that promise.”
"We wanted to have a tool that people were using at all staff levels."
"We wanted something that lived up on their third screen - something that would be available and helpful to them every day. What we've found is it's been easy to get people to get into the habit of using Blue J because it helps people. Blue J allows us to quickly respond to client questions in a way that they can understand it, which helps us deal with the volume of client questions that come in. We were up and running very quickly with Blue J - within 5 minutes, our staff understood how this will be helpful, and the rest of the training program is refining prompting skills and building use cases and best practices."
"We wanted something that lived up on their third screen - something that would be available and helpful to them every day. What we've found is it's been easy to get people to get into the habit of using Blue J because it helps people. Blue J allows us to quickly respond to client questions in a way that they can understand it, which helps us deal with the volume of client questions that come in. We were up and running very quickly with Blue J - within 5 minutes, our staff understood how this will be helpful, and the rest of the training program is refining prompting skills and building use cases and best practices."
