Owning a home builds equity and long-term financial security, and it can also lower your tax bill. At Dear Lender, we help homeowners in Georgia, Florida, and Texas understand how homeownership can work in their favor at tax time. Here is a plain-English guide to the key benefits for 2026.

Federal Tax Benefits for Homeowners

1. Mortgage Interest Deduction

If you itemize deductions, you can deduct the interest you pay on up to $750,000 of mortgage debt used to buy, build, or improve your main or second home ($1 million for loans taken out before December 16, 2017). This limit is now permanent. The deduction is largest in the early years of a loan, when most of each payment goes toward interest.

2. State and Local Tax (SALT) Deduction, Including Property Taxes

Itemizers can deduct state and local taxes, including property taxes. The cap on this deduction rose from $10,000 to $40,000 for 2025 and is $40,400 for 2026, increasing 1% per year through 2029 before returning to $10,000 in 2030. The higher cap phases down for households with income above roughly $500,000.

3. Mortgage Insurance Premium Deduction (New for 2026)

Starting with the 2026 tax year, private mortgage insurance (PMI) premiums are deductible again for itemizers. The full deduction is available to households with adjusted gross income under $100,000 and phases out completely at $110,000. If you put less than 20% down on a conventional loan, this can add up to meaningful savings.

4. Mortgage Points

If you paid points (prepaid interest) to lower your interest rate when buying your home, you may be able to deduct them in the year you purchase. Points paid on a refinance are generally deducted over the life of the loan.

5. Home Equity Loan and HELOC Interest

Interest on a home equity loan or line of credit (HELOC) is deductible only if you use the money to buy, build, or substantially improve your home, and the combined mortgage debt stays within the $750,000 limit. Interest on funds used for other purposes, like paying off credit cards, is not deductible.

6. Home Office Deduction

If you are self-employed and use part of your home regularly and exclusively for your business, you may be able to deduct a portion of expenses such as utilities, insurance, and repairs. W-2 employees who work from home generally do not qualify.

7. Capital Gains Exclusion When You Sell

When you sell your primary residence, you can exclude up to $250,000 of profit from capital gains tax ($500,000 for married couples filing jointly) if you owned and lived in the home for at least two of the five years before the sale.

A Note on Energy Credits

The federal Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit (for solar panels and similar systems) ended on December 31, 2025. Qualifying projects completed in 2025 can still be claimed on your 2025 return, but these credits are not available for work done in 2026 or later.

State Benefits in Georgia, Florida, and Texas

Each state we serve offers a homestead exemption that lowers property taxes on your primary residence. You generally must apply through your county, and you only need to apply once as long as you stay in the home.

Georgia

• Homestead exemption: Georgia offers a statewide homestead exemption on your primary residence, and many counties and cities add their own, larger exemptions.
• Assessment increase cap: Under House Bill 581, a statewide floating homestead exemption limits yearly increases in your home’s assessed value to the rate of inflation, unless your local government opted out. The cap resets when the home is sold.
• Senior and disabled veteran exemptions: Additional exemptions are available for homeowners 65 and older and for qualifying disabled veterans.
• Deadline: Apply with your county tax office by April 1 to receive the exemption for that tax year.

Florida

• Homestead exemption: Florida exempts up to $50,000 of your home’s assessed value. The first $25,000 applies to all property taxes, and the second applies to non-school taxes on assessed value between $50,000 and $75,000.
• Save Our Homes cap: Annual increases in your homestead’s assessed value are capped at 3% or the rate of inflation, whichever is lower.
• Portability: When you move to a new Florida homestead, you can transfer up to $500,000 of your accumulated Save Our Homes savings.
• No state income tax: Florida does not tax personal income.
• On the ballot: Amendment 3 on the November 3, 2026 ballot would increase the homestead exemption for qualifying homes if voters approve it.
• Deadline: Apply with your county property appraiser by March 1.

Texas

• School district homestead exemption: Texas homeowners receive a $140,000 exemption from school district property taxes, up from $100,000 after voters approved the increase in November 2025.
• Seniors and homeowners with disabilities: Homeowners 65 and older or with a disability receive an additional $60,000 school district exemption, for a total of $200,000.
• Appraisal cap: Once your homestead exemption is in place, the taxable value of your home can rise no more than 10% per year, plus new improvements.
• No state income tax: Texas does not tax personal income.
• Deadline: File with your county appraisal district, generally by April 30.

The Bottom Line

Homeownership is an investment in your future, and these tax benefits can make it even more rewarding. Tax rules change and depend on your situation, so we recommend talking with a tax professional before you file. This article is for general information only and is not tax advice.

Ready to take the next step toward owning a home in Georgia, Florida, or Texas? Contact Dear Lender today, and let us help you find the right loan and start building equity.