You know the feeling…a flight upgrade, floor seats for your team’s home game, employee discounts or maybe a free meal. They’re all perks or benefits that give you a bit of satisfaction in a tangible way. One of the many perks of homeownership is an array of federal tax deductions and credits. As the April 18, 2022, tax filing deadline approaches, here are some tax perks available to homeowners who itemize their deductions. As always, it’s wise to consult a tax professional about your return. 

The first step toward enjoying your homeowner perks is determining whether or not to itemize your home and other tax deductions. If the total of all your deductions is more than the standard deduction allowed by the Internal Revenue Service, itemizing is the pathway to perks. 

The standard deduction for the 2021 tax year is:

1. $25,100 for married couples filing jointly, up $300 from the 2020 tax year.
2. $12,550 for single filers and married individuals filing separately, up $150 from the prior year.
3. $18,800 for heads of households, up $150.

Here are the homeowner deductions:

Interest you paid in 2021 is deductible up to a limit, and that limit depends on when you took out the mortgage

• Dec. 16, 2017 or later: You can deduct the interest on a mortgage of up to $750,000 (or up to $375,000 if you're married and filing separately). Mortgage interest on a second home, which is also deductible, is included in the limit.
• Oct. 14, 1987 - Dec. 15, 2017: You can deduct the interest on a mortgage of up to $1 million ($500,000 if married and filing separately).

If you took advantage of low interest rates and refinanced an existing mortgage, the limit depends on the old loan's origination date. If the original mortgage predates Oct. 14, 1987, all the mortgage interest may be deductible.

Look for a statement from your mortgage company showing the amount of interest you paid. If you can’t find it, a copy should be available on the company’s website. 

Interest paid on money borrowed through a home equity loan or home equity line of credit for home improvements also can be deducted. Keep in mind that a home equity loan or line of credit counts toward the mortgage debt limits detailed above. 

When you closed your mortgage, you may have paid discount points to reduce your interest rate. The amount paid may be deductible if you are within the limits of deducting your mortgage interest. However, don’t confuse loan origination fees with discount points. Loan origination fees, which are applied to the lenders’ costs in providing the mortgage, are not deductible.

Property taxes are deductible – along with other state and local taxes paid in 2021 – but only up to a combined $10,000 limit or $5,000 if married and filing separately. If you sold a home last year, you may be able to deduct the taxes paid before the sale.

The home office expense deduction took on greater significance as the pandemic forced many to work remotely. However, tax laws do not allow everyone who has an office at home to claim a deduction. Home office expense deductions are allowable only if you’re self-employed and use part of your home regularly and exclusively for your business. The Internal Revenue Service has a simple chart here to help you see if your home office expenses are deductible.

To determine the amount to deduct, you may use either the IRS "simplified method" or your actual expenses. The IRS website has worksheets for calculating the deduction amount.

As more Americans choose to age in place, making their homes accessible becomes a necessary expense and may be tax deductible. The test is whether the improvements increase the property’s value. If so, the amount of the deduction could be decreased by the increase in property value. Items like entrance ramps, wider doorways, railings, and grab bars are not likely to increase a home’s value and should be deductible. 

Home buyers who made a down payment of less than 20 percent may be paying private mortgage insurance. The insurance cost for conventional and FHA loans is deductible – for now (the deduction expired in 2017, but Congress extended it through 2021).  Also deductible is the guarantee fee for USDA home loans and the funding fee for VA mortgages. As with most deductions, there are restrictions and limits: your adjusted gross income must be less than $109,000 (or $54,500 if married and filing separately) the mortgage insurance contract must have been issued after 2006.

The cost of mortgage insurance is currently deductible. The deduction includes the amount paid for private mortgage insurance for conventional loans and mortgage insurance for FHA loans. It also includes the guarantee fee for USDA home loans and the VA funding fee for VA mortgages. The amount you paid for mortgage insurance is treated as mortgage interest, the IRS says.

To claim this tax deduction for the 2021 tax year, the mortgage insurance contract must have been issued after 2006. Income limits also apply. 

Selling your home for more than you paid for it is a profit called a capital gain. Most capital gains are taxable, but you may be eligible for an exclusion. The IRS allows you to exclude real estate capital gain up to $250,000 if you’re single or $500,000 if married and filing jointly. 

There are a few restrictions. The exclusion does not apply if the house wasn’t your principal residence or if you owned the property for less than two years in the five-year period before you sold it. If you have claimed the exclusion on another home within two years before the sale of your current home, you are not eligible for the exclusion.

You could get a tax credit for up to 26 percent of the cost of installing solar panels, solar water heaters, and other forms of solar energy that is used in the home. Credit is also applicable to wind turbines for residential use and geothermal heal pumps. The tax credit will decrease to 22 percent for the 2023 tax year after which it expires. Details on energy saving tax credits are available from TurboTax.

Just like earning airline miles and credit card points, the key to perks is an eye for detail. For homeowners, that means tracking expenditures and checking to see if they qualify for tax deductions or credits. While tax perks may not be as satisfying as a free beach vacation, owing less taxes or a receiving a nice refund could make a fun trip more affordable.