Minimize what you’ll owe and maximize what you’ll get back at tax time.

People are always making moves (real estate and otherwise) to minimize what they owe and maximize tax returns. But understanding if you’re eligible for tax breaks can be daunting. The tax code is 4 million words and more than 70,000 pages long.

To ensure you’re not missing out on any hefty tax breaks, consider these common home–related tax breaks that are often missed, overlooked, and underused.

State and local tax breaks for green home improvements

While it’s easy to focus on federal income tax deductions, some state tax rates can reach as high as 15 percent of your annual income!

In the past year, homeowners have taken steps to improve their home’s energy efficiency for a variety of reasons, including cash savings on utility bills.

The good news: Many of those improvements are eligible for state, county, and/or city tax credits — or tax breaks. If you’ve installed dual-paned windows, insulation, low-flow plumbing appliances, tankless water heaters, or solar panels last year, dig up your receipts.

Then talk with your tax preparer or visit your state, county, and city government websites to research tax advantages for which you might already be eligible.

1. Mortgage Interest
Interest that you pay on your mortgage is tax deductible, within limits. If you’re married and filing jointly, you can deduct all your interest payments on a maximum of $1 million in mortgage debt secured by a first or second home. The maximums are halved for married taxpayers filing separately.

You can’t use the $1 million deduction if you pay cash for your home and later use it as collateral for an equity loan.

If your lender required you to buy PMI (private mortgage insurance, often required when the loan is for more than 80% of the home’s purchase price), the PMI premiums are tax-deductible for mortgages taken out after 2006. However, the amount of the deduction depends on your income: If your household earnings are over $100,000 per year, the deduction starts to phase out. (The phase-out starts at $50,000 per year if you’re married but filing separately.)

You receive no deduction at all if you’re earning more than $109,000 per year (or $54,500 per year if married but filing separately). This deduction was created as part of the Tax Relief and Health Care Act of 2006 and extended through the end of 2016.

Learn more from IRS Publication 936, Home Mortgage Interest Deduction.

2. Points
Your mortgage lender will charge you a variety of fees, one of which is called “points.” One point is equal to 1% of the loan principal. One to three points are common on home loans, which can easily add up to thousands of dollars. You can fully deduct points associated with a home purchase mortgage.

Refinanced mortgage points are also deductible, but only over the life of the loan, not all at once. Homeowners who refinance can immediately write off the balance of the old points and begin to amortize the new.

3. Equity Loan Interest
You may be able to deduct some of the interest you pay on a home equity loan or line of credit. However, the IRS places a limit on the amount of debt you can treat as “home equity” for this deduction. Your total is limited to the smaller of:

$100,000 (or $50,000 for each member of a married couple if they file separately), or
the total of your home’s fair market value—that is, what you’d get for your house on the open market—minus certain other outstanding debts against it.
IRS Publication 936, Home Mortgage Interest Deduction, explains the details.

4. Home Improvement Loan Interest
If you take out a loan in order to make substantial home improvements, you can deduct the interest on it, with no upper dollar limit. However, the work you’re doing must be a “capital improvement” rather than ordinary repairs.

Qualifying capital improvements are those that increase your home’s value, prolong its life, or adapt it to new uses. For example, qualifying improvements might include adding a new roof, fence, swimming pool, garage, porch, built-in appliances, insulation, heating/cooling systems, landscaping, and so on.

(Before you assume that the deduction will bring you unalloyed financial benefits, however, realize that increasing your home’s square footage or making major improvements could trigger a reassessment and thus higher property taxes.)

Work that doesn’t qualify for an interest deduction includes repairs such as repainting, plastering, wallpapering, replacing broken or cracked tiles, patching the roof, repairing broken windows, and fixing minor leaks. You might want to wait until you’re about to sell your home to do such work, in order to gain the maximum tax benefits. (See Selling Costs, below.) However, you can use a home equity loan up to the limits discussed above to make repairs, and then deduct the interest.

5. Property Taxes
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Often referred to as “real estate taxes,” city or state property taxes are fully deductible from your income. If your lender required you to set up an impound or escrow account, you can’t deduct escrow money held for property taxes until the money is actually used to pay them. Also, a city or state property tax refund reduces your federal deduction by a like amount.

6. Home Office Deduction
If you use a portion of your home exclusively for business purposes, you may be able to deduct home costs related to that portion, such as a percentage of your insurance and repair costs, and depreciation. For details, see the book Home Business Tax Deductions: Keep What You Earn, by Stephen Fishman (Nolo).

7. Selling Costs
If you decide to sell your home, you’ll be able to reduce your taxable capital gain by the amount of your selling costs. (You may not have to worry about your gain at all if it’s low enough to fall within the exclusion described below, but if your profits from the sale look to be higher then the exclusion, take a closer look at this section.)

Real estate broker’s commissions, title insurance, legal fees, advertising costs, administrative costs, escrow fees, and inspection fees are all considered selling costs.

All selling costs are deducted from your gain. Your gain is your home’s selling price, minus deductible closing costs, selling costs, and your tax basis in the property. (Your basis is the original purchase price, plus the cost of capital improvements, minus any depreciation.)

8. Capital Gains Exclusion
Married taxpayers who file jointly now get to keep, tax free, up to $500,000 in profit on the sale of a home used as a principal residence for two of the prior five years. Single folks (including home co-owners if they separately qualify) and married taxpayers who file separately get to keep up to $250,000 each, tax free. (For more information, see Tax Breaks for Selling Your Home.)

9. Moving Costs
If you move because you got a new job, you may be able to deduct some of your moving costs. To qualify for these deductions you must meet several IRS requirements, including that your new job must be at least 50 miles farther from your old home than your old job was. Moving cost deductions can include travel or transportation costs, expenses for lodging, and fees for storing your household goods. (See IRS Publication 521, Moving Expenses.)

10. Mortgage Tax Credit
A home-buying program called mortgage credit certificate (MCC) allows low-income, first-time homebuyers to benefit from a mortgage interest tax credit of up to 20% of the mortgage interest payments made on a home (the amount of the credit varies by jurisdiction). The maximum credit is $2,000 per year if the certificate credit rate is over 20%. (See IRS Publication 530, Tax Information for Homeowners.) You must first apply to your state or local government for an actual certificate. This credit is available each year you keep the loan and live in the house purchased with the certificate. The credit is subtracted, dollar for dollar, from the income tax owed.

Real Estate Deduction Information

For more information on real estate tax laws, visit www.irs.gov. You’ll find basic information for first-time homeowners (IRS Publication 530) and publications about selling your house (IRS Publication 523), business use of your home (Publication 587), moving expenses (Publication 521), and home mortgage interest deductions (Publication 936).

Don’t Overlooked Tax Breaks

Minimize what you’ll owe and maximize what you’ll get back at tax time.

You can’t use the $1 million deduction if you pay cash for your home and later use it as collateral for an equity loan.

You receive no deduction at all if you’re earning more than $109,000 per year (or $54,500 per year if married but filing separately). This deduction was created as part of the Tax Relief and Health Care Act of 2006 and extended through the end of 2016.

Learn more from IRS Publication 936, Home Mortgage Interest Deduction.

Refinanced mortgage points are also deductible, but only over the life of the loan, not all at once. Homeowners who refinance can immediately write off the balance of the old points and begin to amortize the new.

3. Equity Loan Interest
You may be able to deduct some of the interest you pay on a home equity loan or line of credit. However, the IRS places a limit on the amount of debt you can treat as “home equity” for this deduction. Your total is limited to the smaller of:

4. Home Improvement Loan Interest
If you take out a loan in order to make substantial home improvements, you can deduct the interest on it, with no upper dollar limit. However, the work you’re doing must be a “capital improvement” rather than ordinary repairs.

(Before you assume that the deduction will bring you unalloyed financial benefits, however, realize that increasing your home’s square footage or making major improvements could trigger a reassessment and thus higher property taxes.)

Real estate broker’s commissions, title insurance, legal fees, advertising costs, administrative costs, escrow fees, and inspection fees are all considered selling costs.

All selling costs are deducted from your gain. Your gain is your home’s selling price, minus deductible closing costs, selling costs, and your tax basis in the property. (Your basis is the original purchase price, plus the cost of capital improvements, minus any depreciation.)

Real Estate Deduction Information

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Don’t Overlooked Tax Breaks

Minimize what you’ll owe and maximize what you’ll get back at tax time.

You can’t use the $1 million deduction if you pay cash for your home and later use it as collateral for an equity loan.

You receive no deduction at all if you’re earning more than $109,000 per year (or $54,500 per year if married but filing separately). This deduction was created as part of the Tax Relief and Health Care Act of 2006 and extended through the end of 2016.

Learn more from IRS Publication 936, Home Mortgage Interest Deduction.

Refinanced mortgage points are also deductible, but only over the life of the loan, not all at once. Homeowners who refinance can immediately write off the balance of the old points and begin to amortize the new.

3. Equity Loan InterestYou may be able to deduct some of the interest you pay on a home equity loan or line of credit. However, the IRS places a limit on the amount of debt you can treat as “home equity” for this deduction. Your total is limited to the smaller of:

4. Home Improvement Loan InterestIf you take out a loan in order to make substantial home improvements, you can deduct the interest on it, with no upper dollar limit. However, the work you’re doing must be a “capital improvement” rather than ordinary repairs.

(Before you assume that the deduction will bring you unalloyed financial benefits, however, realize that increasing your home’s square footage or making major improvements could trigger a reassessment and thus higher property taxes.)

Real estate broker’s commissions, title insurance, legal fees, advertising costs, administrative costs, escrow fees, and inspection fees are all considered selling costs.

All selling costs are deducted from your gain. Your gain is your home’s selling price, minus deductible closing costs, selling costs, and your tax basis in the property. (Your basis is the original purchase price, plus the cost of capital improvements, minus any depreciation.)

Real Estate Deduction Information

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3. Equity Loan Interest
You may be able to deduct some of the interest you pay on a home equity loan or line of credit. However, the IRS places a limit on the amount of debt you can treat as “home equity” for this deduction. Your total is limited to the smaller of:

4. Home Improvement Loan Interest
If you take out a loan in order to make substantial home improvements, you can deduct the interest on it, with no upper dollar limit. However, the work you’re doing must be a “capital improvement” rather than ordinary repairs.