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CA Homeowners
Key Tax Benefits
Mortgage Interest Deduction:
interest paid on loans up to $750,000 (for married couples filing jointly) to buy or improve a primary or second home is deductible, IRS 1098 form for reporting.
Property Tax Deduction:
under the 2026 One Big Beautiful Bill Act (OBBBA), homeowners can deduct up to $40,400 for state and local taxes (SALT), which includes property taxes.
Mortgage Points Deduction:
points paid to reduce the interest rate on a loan at the time of purchase are generally deductible in the year they are paid.
Private Mortgage Insurance (PMI) Premiums:
as of 2026, PMI premiums are deductible, providing relief for homeowners who paid less than a 20% down payment.
Capital Gains Exclusion:
if the property is your primary residence, you may exclude up to $250,000 ($500,000 for married couples) of capital gains from taxation when you sell, provided you lived in the home for at least two of the five years before the sale.
Home Office Deduction:
self-employed homeowners or remote workers may deduct a portion of home-related expenses (utilities, insurance, etc.) based on the percentage of the home used exclusively for business.
Important Considerations
Itemizing Deductions:
to claim these benefits, you must itemize deductions rather than taking the standard deduction.
Loan Limits:
for homes purchased after Dec 15, 2017, the interest deduction applies to debt up to $750,000 ( $375,000 or married filing separately).
Disclaimer:
Tax laws are subject to change. Consult a tax professional for advice tailored to your specific situation.