This blog is for educational purposes only, not an offer of credit or advertisement for current loan terms. It does not provide legal advice. Refer to our loan web pages or consult professional advisors for specific information.
Owning a home in Florida provides more than just a place to call your own—it can also open the door to significant tax deductions for homeowners.
As a Florida homeowner, you're already saving money thanks to no state income tax.
However, it also means you may qualify for several tax deductions that reduce your taxable income and leave more money in your pocket.
MIDFLORIDA Credit Union is always looking for ways to help our homeowners save money and make the most of their homeowning experience.
To help you out, we’ve listed six tax deductions for homeowners in Florida and explained how you can take advantage of them during tax season.
Find your mortgage solution with MIDFLORIDA.
1. Mortgage interest deduction
The mortgage interest deduction is arguably the most valuable tax benefit for homeowners.
Itemizing your deductions enables you to deduct the interest paid on your mortgage if the loans were used to buy, build, or improve your home.
Key points:
- For loans taken out after December 15, 2017, the deduction applies to mortgage debt up to $750,000 ($375,000 if you are married and filing separately).
- Mortgages originating before this date are eligible for a higher limit of $1 million (or $500,000 if married filing separately).
You’ll need Form 1098 from your lender to claim this deduction, which outlines the mortgage interest you paid during the year.
2. Property tax deduction
Property taxes are another major deduction for Florida homeowners.
While Florida doesn’t impose a state income tax, homeowners can still deduct property taxes based on their state and local tax (SALT) payments.
Things to know:
- The SALT deduction is a maximum of $10,000 per year for single filers and married couples filing jointly ($5,000 for married filing separately).
- If you escrow your property taxes, check your mortgage statement or Form 1098 to confirm the amount paid by your lender on your behalf.
3. Home office deduction
With remote work becoming increasingly common, many Florida homeowners may qualify for the home office deduction. This deduction allows you to deduct expenses related to a portion of your home used exclusively for business purposes.
Eligibility criteria:
- The home office must be your principal place of business or used regularly and exclusively for business.
- The deduction can be applied to homeowners and renters.
You can calculate this deduction using one of two methods:
- Simplified method: Deduct $5 per square foot of your home office (maximum 300 square feet).
- Regular method: Deduct a percentage of your home-related expenses (such as utilities, insurance, and maintenance) based on the square footage of your home office.
4. Energy-efficient home improvement credits
If you’ve made energy-efficient upgrades to your Florida home, you may qualify for valuable tax credits.
Unlike deductions—which reduce your taxable income—tax credits directly reduce the tax you owe.
Examples of eligible upgrades:
- Solar panels, solar water heaters, or geothermal heat pumps
- Energy-efficient windows, doors, insulation, or HVAC systems
Credits to know:
- Residential Clean Energy Credit: Covers 30% of the cost of installing renewable 'green' energy systems, such as solar panels
- Energy Efficient Home Improvement Credit: Provides up to $1,200 annually for qualifying upgrades, including windows and doors
Keep receipts and documentation for all upgrades to claim these credits.
5. Points paid on your mortgage
Points, also called discount points or loan origination fees, are often paid upfront to secure a lower interest rate on your mortgage.
These points may be tax-deductible, providing another opportunity to reduce your tax burden.
Key considerations:
- The points you paid on a loan to purchase or build your primary home generally apply to the year in which they were paid.
- Points paid during a refinance must typically be deducted over the life of the loan.
Your lender should include information about points paid on your Form 1098.
6. Capital gains exclusion on home sales
Selling your home can result in significant profits, but Florida homeowners may benefit from the capital gains exclusion, enabling you to exclude a portion of the profit from taxes.
Eligibility:
- You must have owned and lived in the home as your primary residence (at least two of the last five years).
- The exclusion applies to gains up to $250,000 for single filers or $500,000 for married couples filing jointly.
Example:
If you bought your home for $250,000 and sold it for $500,000, you can exclude the $250,000 gain from your taxable income (if filing singly), provided you meet the criteria.
This exclusion can only be claimed once every two years.
How to maximize your tax savings
To make the most of these tax deductions and credits, follow these tips:
- Keep thorough records: Maintain documentation for all home-related expenses, including mortgage statements, property tax bills, and receipts for improvements or repairs.
- Itemize deductions when applicable: While the standard deduction is an attractive option for many taxpayers, itemizing may result in greater savings if you qualify for significant home-related deductions.
- Consult a tax professional: A tax advisor can help you avoid mistakes with your tax deductions and ensure you claim all the benefits you’re entitled to while staying compliant with IRS rules.
Why Florida homeowners have unique advantages
Florida offers several unique advantages for homeowners, including:
- No state income tax: While this doesn’t directly affect federal deductions, it reduces the overall tax burden for residents.
- Homestead exemption: This state-level benefit reduces the taxable value of your primary residence—effectively lowering your property tax bill.
Florida homeowners can enjoy substantial financial savings by combining federal tax deductions with state-level benefits.
Take advantage of the MIDFLORIDA connection
Homeownership offers more than just shelter and a place for your stuff—it provides valuable tax savings that can significantly impact your finances.
From the mortgage interest deduction to energy-efficient upgrade credits, Florida homeowners have numerous opportunities to reduce their tax burden.
If you’re ready to take the next step in your homeownership journey, start your application with MIDFLORIDA.
