IRS Publication 530 (2025): Essential Tax Guide for Homeowners – Costs, Deductions & Credits Explained

Julia Kagan is a seasoned financial and consumer journalist, formerly senior editor for personal finance at Investopedia.

What Is IRS Publication 530 in 2024?

IRS Publication 530 is the authoritative IRS guide designed specifically for homeowners, detailing how to handle taxes related to homeownership. It covers key areas such as mortgage interest deductions, closing costs, property taxes, capital gains calculations, and home repair expenses. Given the tax law updates enacted in December 2019, it’s crucial to refer to the latest 2024 version to ensure compliance and optimize your tax benefits.

Key Highlights

• Clarifies which home-related expenses are taxable and how to accurately compute your tax liability.
• Explains how to determine capital gains or losses when selling your property by considering purchase price and adjustments over time.
• Details itemized deduction options versus the standard deduction, helping you decide the most beneficial approach for your tax return.

Comprehensive Overview of IRS Publication 530

This IRS document encompasses tax guidelines for various residential property types, including single-family homes, condos, co-ops, mobile homes, apartments, and house trailers equipped with essential living facilities.

It specifies deductible expenses such as mortgage interest, mortgage insurance premiums, and state and local real estate taxes. Conversely, non-deductible items include utility bills, other insurance premiums, and most depreciation costs. Homeowners who opt to itemize deductions must complete Schedule A on Form 1040, foregoing the standard deduction.

Publication 530 also guides homeowners on calculating their home's cost basis and adjusted basis, crucial for accurately assessing capital gains or losses upon sale.

Additionally, it outlines eligibility and filing procedures for the mortgage interest credit, a program aimed at making homeownership affordable for lower-income buyers. To claim this credit, homeowners need a state or local government-issued Mortgage Credit Certificate (MCC) and must file Forms 8396 and 5405 accordingly.

Understanding Real Estate Taxes

Real estate taxes are annual property value-based taxes levied by state and local governments. These taxes are generally deductible if uniformly applied across all properties in a community.

However, fees for specific services or utility charges, even if paid to taxing authorities, do not qualify as deductible real estate taxes. Examples include monthly utility fees, lawn maintenance charges due to municipal ordinances, or flat fees for singular services.

IRS Publication 530 advises homeowners to review their real estate tax bills carefully and contact their taxing authorities if the bill does not clearly separate deductible taxes from non-deductible service charges.

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