January 1, 2026, 12:40 PM ET
Did you sell or buy a home in 2025? There’s quite a bit to think about, especially for first-time buyers or sellers. With numerous tax law changes and financial considerations throughout the year, even those who’ve done this before might find themselves needing a little refresher. So, whether you’re buying or selling, let’s explore some important factors to keep in mind.
Tax Tips for Buying a Home in 2025
If you purchased your first home with a mortgage last year, you’ll probably want to have your tax documents organized come tax season. Unlike renting, mortgage interest and property taxes can usually be deducted. Plus, with new tax reforms enacted over the summer, you might have the option to itemize your expenses instead of taking the standard deduction.
For 2025, the standard deduction is set at $15,750 for individuals and $31,500 for couples filing together, according to Daniel Schomper, a wealth manager at Fairway Wealth Management in Independence, Ohio. If you rack up enough deductible expenses throughout the year, considering itemization might be wise.
The “One Big Beautiful Bill Act,” the administration’s key tax and spending legislation, raised the limit on state and local tax deductions to $40,000, although higher-income taxpayers will see a reduced limit.
Mortgage interest remains deductible up to $750,000, and you can also deduct private mortgage insurance premiums.
No matter if this is your first purchase or perhaps your fourth, it’s crucial to keep thorough records that can help with profitability in 2025 and beyond.
“It’s really important to save your records,” emphasizes Shomper.
This advice applies to all the documents you receive at closing for home purchases and mortgages. Additionally, get into the routine of saving receipts related to home improvements, suggests Vance Barth, founder of Your Dedicated Fiduciary.
When it comes time to sell your home, you may reduce the capital gains tax owed by proving you’ve invested in relevant improvements.
So, what does the IRS count as qualifying improvements? Generally, upgrades that significantly enhance the home’s structure and livability count; ordinary wear-and-tear repairs won’t. Shomper recommends opting for a full roof replacement instead of just repairing it. For more details, check out this helpful IRS explanation.
Tax Tips for Selling Your Home in 2025
If you sold a home in 2025, especially one you’ve held for a significant period, you may have made a substantial profit. Luckily, homeowners can often exclude capital gains from this sale, Barth explains.
For singles, up to $250,000 can be excluded, while joint filers can exempt as much as $500,000. Keep in mind, there are certain conditions—like having lived in the home for two consecutive years within the last five years.
However, if you’ve owned your home for a long time, it’s quite easy to exceed these exclusion amounts. In such situations, Barth notes, it becomes beneficial to document any capital improvements made. Keeping track of upgrades as they occur can save you trouble later when trying to recall past expenses.
One last thing to consider: unlike other assets, if you incur a capital loss from selling your home, that loss won’t impact your tax responsibilities at all.
