Springtime in Arizona means perfect weather, longer days, and sunshine—but it also brings something a little less exciting… tax season. 🫣
But before you start stressing, we’ve got some good news for current and future homeowners! Owning a home comes with some major tax benefits that many people overlook.
Yes, you read that right—benefits! Because not everything about tax season has to be a headache. 💰
So, whether you’re a first-time homebuyer or a seasoned homeowner, keep reading to discover 10 homeowner tax credits and deductions that could help put some extra money back in your pocket this tax season.
1. Mortgage Interest Deduction
One of the biggest tax breaks for homeowners is the mortgage interest deduction. If you have a mortgage on your primary or secondary home, you may be able to deduct the interest paid throughout the year.
For mortgages up to $750,000 ($1 million if purchased before December 15, 2017), this can lower your taxable income and lead to serious savings—especially in the early years of homeownership when interest payments are at their highest.
2. Property Tax Deduction
Homeowners in Arizona can deduct up to $10,000 ($5,000 if married filing separately) in state and local property taxes each year.
Since property tax rates vary by county, make sure you keep records of your tax payments to ensure you claim the full deduction.
3. First-Time Homebuyer Programs
While the federal First-Time Homebuyer Credit ended in 2010, there are still state and local programs that offer grants and tax credits to first-time homebuyers.
💡 Arizona Tip: If you’re a first-time homebuyer, you may qualify for down payment assistance programs or penalty-free IRA withdrawals (up to $10,000) to help with your purchase.
4. Homestead Exemption
Arizona doesn’t have a traditional homestead exemption for property taxes, but you can protect up to $250,000 of your home’s value from creditors under the state’s homestead protection laws.
Some exemptions do exist for seniors, veterans, and disabled homeowners, so working with a local tax professional can help you maximize your benefits.
5. Mortgage Points Deduction
Did you buy a home last year and pay points to lower your interest rate? Good news—you might be able to deduct those points!
Mortgage points are typically deductible in the year they were paid, but in some cases, the deduction can be spread out over the life of the loan. Your tax pro can help determine your eligibility!
6. Energy-Efficient Home Improvement Credits
Thinking about going solar or making energy-efficient upgrades to your home? You could be rewarded with tax credits!
- The Residential Clean Energy Credit allows homeowners to claim 30% of the cost for installing solar panels, wind turbines, or geothermal systems (through 2032).
- The Energy Efficient Home Improvement Credit provides up to $1,200 annually for upgraded insulation, energy-efficient windows, and other eco-friendly home improvements.
7. Home Office Deduction
If you work from home and have a dedicated office space, you may qualify for the home office deduction.
This deduction lets you write off a portion of your home expenses (utilities, rent for renters, or mortgage interest) based on the square footage of your office.
💡 Note: This applies only to self-employed individuals—not W-2 employees.
8. Capital Gains Exclusion (For Sellers!)
Thinking of selling your home? This one’s for you!
If you’ve lived in your primary home for at least 2 out of the last 5 years, you can exclude up to $250,000 ($500,000 for married couples) in capital gains from your taxable income when you sell.
That means if you make a profit on your home sale, you could potentially keep all of it tax-free!
9. Medical Home Improvement Deduction
If you made home modifications for medical reasons (like installing ramps, widening doorways, or adding stairlifts), you may be able to deduct these expenses as medical costs—as long as they don’t increase your home’s value.
💡 Pro Tip: Work with a tax professional to see if you qualify for this often-overlooked deduction.
10. Rental Property Deductions
Do you rent out part of your home? If so, you may qualify for additional deductions like:
✔️ Property management fees
✔️ Maintenance costs
✔️ Depreciation
✔️ Mortgage interest
These deductions help offset your rental income and lower your taxable income—so make sure to keep track of your expenses!
Maximize Your Tax Savings This Year!
Owning a home in Arizona comes with financial responsibilities, but it also brings amazing tax benefits that many homeowners aren’t fully aware of.
To take advantage of these deductions and credits, make sure to consult a local tax professional to see what applies to your specific situation.
And of course—if you’re thinking about buying or selling a home this spring, we’re always here to help!
📲 Call or text us at 623-335-2156
💻 Visit us online: www.realty4rescue.com
Your Realty 4 Rescue Team
🐾 Helping People & Their Pets Find Their Dream Homes