Bought or sold a home in 2025? Here's what to know at tax time
Did you buy or sell a home in 2025? There’s a lot to think about, especially for first-time buyers or sellers. And with so many changes to tax laws and other financial matters during the course of the year, you may want a refresher even if you’re not a first-timer. Read on for all kinds of considerations, no matter which side of the deal you were on in 2025.
2025 tax tips if you bought a home
If you bought your first home during 2025 using a mortgage, you’re probably going to get a hand at tax time. Unlike rent, mortgage interest and property taxes are usually deductible. And with the expansive tax changes signed into law this summer, you may be able to take advantage of itemizing your expenses rather than relying on the standard deduction.
For 2025, the standard deduction is $15,750 for single filers, while it's $31,500 for those filing jointly, notes Daniel Shomper, a wealth manager with Independence, Ohio-based Fairway Wealth Management. If you’ve accumulated more tax-deductible expenses than that during the year, you may be better off itemizing.
The White House's signature tax, spending and policy legislation, popularly known as the "One Big Beautiful Bill Act," increased the amount of state and local taxes you can deduct from your federal income tax to $40,000. (That limit is lower for higher-income taxpayers, however.)
More: Inflation may surge again thanks to the tax-law giveaways
Mortgage interest is also now deductible up to $750,000, and mortgage insurance premiums, which are also known as “private mortgage insurance,” are also now deductible.
Whether you’re a first-time buyer or making your third or fourth purchase, perhaps the single most important thing to keep in mind is keeping excellent records for your returns in 2025 and beyond.
“I want to stress how important saving your records is,” Shomper says.
That applies to the documents you got at your closing, both for the purchase of the home and for your mortgage. But you should also get into the habit of saving everything related to home improvements, said Vance Barse, founder of the national financial advisory company Your Dedicated Fiduciary.
That’s because when you get ready to sell your home in the future, showing that you spent money on applicable improvements may help you reduce the amount of capital gains tax you may owe.
What’s applicable, from the perspective of the IRS? Upgrades that substantially improve the structure and integrity of the home and contribute to making it more modern or more livable. Repairs from normal wear and tear don’t count. Think replacing the roof, not patching it up, suggests Shomper. The IRS also has this helpful explainer.
2025 tax tips if you sold a home
If you sold a home during 2025, particularly one you had owned for a while, you may have pocketed a good amount of cash. Luckily, homeowners are entitled to an exclusion on the capital gains you reap from the sale, Barse says.
Single filers can exclude up to $250,000, while the exclusion goes up to $500,000 for taxpayers filing jointly. The exclusion does have some restrictions: you need to have lived in the home for two years in a row during the last five years, for example.
If you’ve lived in the home for a long time, you may easily exceed that amount, however. That’s where being able to show that you’ve made capital improvements can be helpful, Barse notes. He advises getting into the habit of documenting all your upgrades as you incur the expenses so you don’t forget anything or have to track down old expenses years later.
One more thing to keep in mind: unlike with assets like stocks, any capital loss you incur while selling a home can’t be applied to your taxes in any way.
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