For most Americans, buying a home is the biggest investment they will ever make. Whether you’re purchasing a charming coastal retreat or selling a property in the heart of Portsmouth, NH, understanding tax benefits can help you maximize your financial return. (*NOTE)
Jim Lee and Ann Cummings of RE/MAX Shoreline—trusted local real estate experts—are here to guide you through the process, ensuring you sell your home for the best price, in the shortest time, and with the fewest complications. Below, we explore key tax deductions, credits, and strategies for homeowners in the New Hampshire Seacoast.
Key Tax Deductions for Homeowners
Mortgage Interest Deduction
Homeowners who itemize deductions can deduct mortgage interest paid on loans for their primary or secondary home, with some limits:
- For mortgages originated on or before December 15, 2017, interest on up to $1 million of mortgage debt is deductible ($500,000 if married filing separately).
- For mortgages after that date, interest is deductible on up to $750,000 of mortgage debt ($375,000 if married filing separately).
These rules could change after 2025, depending on future tax law updates. Learn more from IRS Publication 936, Home Mortgage Interest Deduction.
State and Local Property Tax Deduction
New Hampshire is known for its lack of state income tax, but property taxes can be substantial. Homeowners who itemize can deduct state and local property taxes (SALT), subject to a $10,000 limit ($5,000 if married filing separately).
This cap may change in future tax reforms, so staying informed is crucial.
Home Office Deduction
If you’re self-employed and use part of your home exclusively for business, you may qualify for a home office deduction. The simplified method allows:
- $5 per square foot, up to 300 square feet.
- Full or partial deduction of utilities, mortgage interest, and repairs for the office space.
However, this deduction does not apply if you work remotely for an employer and receive a W-2.
What Homeowners Cannot Deduct
While homeownership offers valuable deductions, some costs are not deductible, including:
- Home insurance (including title insurance)
- Domestic help wages
- Depreciation for personal use homes
- Routine home repairs and utilities
- Homeowners Association (HOA) fees
- Wi-Fi and internet bills
Tax Credits for Energy-Efficient Homeowners
Energy-Efficient Home Improvement Credit
If you’ve upgraded your home with energy-efficient improvements, you may qualify for a tax credit of up to $3,200 per year. This credit covers:
- Windows and doors: Up to $600
- Heat pumps, biomass stoves, and water heaters: Up to $2,000
- Insulation and other energy-efficient materials: 30% of the cost
Visit the Energy Efficient Home Improvement Credit for details.
Residential Clean Energy Credit (Solar, Wind, Geothermal)
Homeowners who install solar panels, wind turbines, geothermal systems, or battery storage can claim a 30% tax credit with no annual or lifetime cap.
This non-refundable credit can be carried forward to future tax years if it exceeds your owed tax. Learn more at the Residential Clean Energy Credit page.
Selling Your Home? Here’s What to Know About Taxes
Home Sale Capital Gains Exclusion
If your home has appreciated in value, you may owe capital gains tax when selling. However, you could exclude:
- Up to $250,000 of gains if filing as single
- Up to $500,000 if married, filing jointly
To qualify, you must have lived in the home as your primary residence for at least two of the last five years before selling. This exemption helps sellers in Portsmouth and the NH Seacoast keep more profit from their sales.
Leaving Your Home to Heirs? The Step-Up in Basis Advantage
If a homeowner passes away and leaves their home to heirs, the capital gains tax resets to the home’s market value at the time of death. This “step-up in basis” helps heirs avoid large capital gains taxes if they sell the property.
Selling Your Home in Portsmouth, NH? Work with Local Experts
RE/MAX: The Most Trusted Name in Real Estate!
According to the BrandSpark American Trust Study, RE/MAX is the #1 trusted real estate brand—and for good reason!
If you’re buying or selling in the New Hampshire Seacoast & Southern Maine, trust the best in the business: Ann Cummings & Jim Lee with RE/MAX Shoreline. Experience, integrity, and results—every step of the way!
Explore the latest market trends and listings:
Visit NewHampshireMaineRealEstate.com
Call Jim & Ann today at: 603-436-1221
Let’s make your home sale smooth, stress-free, and profitable!
(*NOTE) The REALTOR Code of Ethics does not permit REALTORS to give legal or tax advice. For the best advice in these areas, we recommend you contact the appropriate persons who are competent in those areas.
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