4 expiring tax breaks for homeowners in 2025

Miami Herald

5 days ago

Several significant tax benefits that homeowners have relied on for years will disappear on December 31, 2025, reports NewHomeSource.
Why it matters : These expiring tax breaks could mean thousands of dollars in additional taxes for homeowners across the country.
The Tax Cuts and Jobs Act (TCJA), passed in 2017, was designed to reduce taxes for most Americans by simplifying the tax code and lowering rates. Many of its key provisions were designed to be temporary, with an expiration date of December 31, 2025.
See More: 7 hidden costs of home ownership you need to know before buying
While Congress passed the "One Big Beautiful Bill" on July 3, 2025, the legislation confirmed that several key homeowner tax benefits will still expire at year-end, despite extending others.
1. Energy Tax Credits Termination
Under today's political climate, provisions like clean energy incentives were vulnerable to cuts, and now both the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit have been repealed for systems placed in service after December 31, 2025.
The current tax law provides incentives for home energy improvements, including exterior doors, windows, and insulation materials. The credit covers 30% of costs with a maximum of $1,200. Heat pumps, biomass stoves, and boilers have a separate $2,000 annual limit.
"I have encouraged clients this year to consider certain energy improvements earlier over waiting. Higher value improvements, such as geothermal heat pumps, should be prioritized," said Keith Schroeder, a Wisconsin-based tax expert who runs the hugely popular The Wealthy Accountant blog.
Also eliminated is the current tax incentive for homes and businesses to install EV charging stations.
2. Mortgage Interest Deduction Remains Restricted
The mortgage interest landscape won't improve for homeowners with larger mortgages.
Currently, homeowners can deduct mortgage interest on up to $750,000 of mortgage debt. Before the TCJA, this limit was $1 million. The current restriction applies to mortgages taken after December 15, 2017.
The reality : The new legislation makes this $750,000 limit permanent, confirming there's no indication this limit will ever return to the previous $1 million threshold.
"Taxpayers have lived with this restriction since 2018, so it is business as usual," Schroeder said. "Income property owners may wish to shift mortgage debt from their primary residence and second home to the income property."
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3. Mortgage Forgiveness Tax Break Expires
Debt forgiveness becomes taxable again starting in 2026.
The Mortgage Forgiveness Debt Relief Act, which has been extended multiple times, is set to expire at the end of 2025. This provision allows homeowners to exclude forgiven mortgage debt from their taxable income in cases of foreclosure, short sales, or loan modifications.
"This is a very serious issue for distressed homeowners," Schroeder said. "Unless discharged in bankruptcy or to the extent of insolvency, debt forgiveness is included in income. In short, you can go from owing the bank to owing the government."
Without this protection, homeowners who receive mortgage debt forgiveness after 2025 could face significant tax bills on the forgiven amounts.
4. New Home Builder Credit Ends
The 45L New Energy Efficient Home Credit for homebuilders ends at the end of 2025, and it could impact home prices.
This credit provided builders with incentives ranging from $500 to $5,000 for meeting certain energy efficiency standards such as Energy Star certification.
"Since the loss of a tax credit is the same as a tax increase, homebuilders will feel the loss. Homebuyers may find the price of a home a bit higher to offset the homebuilder's loss," Schroeder said. "It always comes down to the end user."
What this means: Homebuyers may face higher home prices as builders adjust to losing these tax incentives.See More: 7 tax benefits of owning a home
What Homeowners Should Do Now
Planning becomes crucial as the December 31, 2025, deadline approaches, and these tax benefits potentially disappear.
"My advice is to get those energy improvements and clean energy plans moving now," Schroeder said. "Planning has always been the best tax reduction tool."
For prospective homebuyers, expect potential price increases as builders adjust to losing tax incentives. "The homebuilder may swallow some of the loss in difficult markets, but in the end, the homebuyer will pay more as homebuilders adjust to the new tax environment," Schroeder said.
The bottom line: These expiring benefits represent real money for homeowners. The combination of eliminated energy credits and lost builder incentives alone could cost families thousands in additional taxes and higher home prices starting in 2026.NewHomeSource is a platform for new home listings with homebuilder reviews.This story was produced by NewHomeSource and reviewed and distributed by Stacker.
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