5 Real Estate Tax Deductions Phoenix Homeowners May Be Missing

Nobody likes paying taxes, and as April 15 gets closer, many Phoenix homeowners start looking for ways to reduce what they owe. One area that often gets overlooked is real estate related tax deductions. While every situation is different, there are several potential deductions homeowners may want to discuss with their tax professional.

As a local Realtor, I believe part of my job is helping homeowners stay informed not just about buying and selling, but also about the financial side of homeownership. Here are five real estate tax deductions Phoenix homeowners may be missing.

1. Mortgage Interest Deduction

Homeowners may be able to deduct mortgage interest if the loan is secured by a qualified home and they itemize deductions on Schedule A.

What to know:This usually benefits homeowners whose itemized deductions are greater than the standard deduction, so it may not apply to everyone.

2. Property Taxes

Homeowners may also be able to deduct qualifying property taxes through the State and Local Tax deduction, often called SALT.

What to know:There are limits on how much can be deducted, and the actual tax benefit depends on factors like income, filing status, and timing.

3. Points Paid on a Home Loan

If you purchased a home recently, points paid at closing may be deductible since they are considered prepaid interest.

What to know:This deduction can get complicated. In some cases, points may be deducted in the year they are paid, while in other cases they must be deducted over time.

4. Interest on a Home Equity Loan or HELOC

Interest on a home equity loan or line of credit may be deductible if the funds were used to buy, build, or substantially improve the home securing the loan.

What to know:The way the money was used is very important. Home improvements may qualify, while personal expenses usually do not.

5. Rental Property Expenses and Depreciation

Homeowners with rental properties may be able to deduct expenses like repairs, maintenance, insurance, and other operating costs. Depreciation may also help recover the cost of the property over time.

What to know:Depending on the situation, some rental property expenses may even offset rental income, subject to tax rules and limitations.

Bonus Tip for Arizona Homeowners

Arizona homeowners should also ask their tax professional about possible state specific benefits. In some cases, taxpayers may be able to itemize on their Arizona return even if they take the standard deduction on their federal return.

Real estate and taxes often go hand in hand, and understanding the basics can help homeowners make smarter financial decisions. While I am not a tax advisor, I am always happy to help connect my clients with trusted local professionals and provide guidance on the homeownership side of the equation. If you have questions about buying, selling, investing, or making the most of your home in today’s Phoenix market, I’m here to help.

Natalie Fricke

480.748.7885