As tax season meets a shifting housing market, Valley homeowners are taking a closer look at what they can claim and how bigger economic forces are shaping their next move.
Trevor Halpern, J.D., CEO of Halpern Residential at eXp, says the questions are predictable but the answers are anything but simple. “Every year, homeowners ask what they can deduct and what they can’t,” he says. “There are real tax advantages in real estate, but there are also a lot of rules. The details matter and consulting with your tax professional on all of them is important.”
The deductions homeowners should actually understand
Mortgage interest remains one of the most talked-about deductions, but only for those who itemize and exceed the standard deduction threshold. Property taxes can also be written off, though caps often limit how much homeowners actually benefit. “A lot of people assume they can write off all of their property taxes, and that’s not always how it works,” Halpern says.
For newer homeowners, points paid at closing may be deductible, either upfront or over time depending on the loan structure. It is one of several areas where the fine print matters. “This is one of those areas where it gets technical quickly,” Halpern says.
Home equity loans and HELOCs come with a strict qualifier. Interest may only be deductible if the funds are used to improve the home tied to the loan. “Use matters,” he says. “If you’re using those funds for a home improvement project, there may be a deduction. If you’re using them to pay off personal debt, there usually isn’t.”
Rental properties often unlock the strongest tax advantages. Owners may be able to deduct expenses like maintenance and insurance, and depreciation can help offset income over time, sometimes even beyond rental earnings depending on individual circumstances.
There is also a local edge many miss. Arizona homeowners may be able to itemize on their state return even if they take the federal standard deduction. “Even if you’re not itemizing federally, that doesn’t automatically mean there’s no tax benefit,” Halpern says. “Arizona plays by slightly different rules there.”
Why global forces are hitting local home prices
At the same time, global uncertainty is influencing the Phoenix market. Mortgage rates, which briefly dipped below 6 percent, have moved back above that level, driven not just by the Federal Reserve but by bond market reactions to inflation concerns, energy prices, and geopolitical tension.
“It doesn’t take a huge jump in rates to affect affordability,” Halpern says. Even small increases can shift monthly payments and reduce buying power, causing some buyers and sellers to pause. Still, activity has not disappeared. “Serious buyers are still buying, and well-priced homes are still moving,” he says.
For homeowners across the Valley, this season is about being informed and intentional. Understanding the rules, watching the market, and working with the right professionals can shape better outcomes on both sides of the transaction.
Insider Takeaways
- Mortgage interest deductions only apply if you itemize and exceed the standard deduction.
- Property tax write-offs are capped, which can significantly reduce expected savings.
- Points paid at closing may be deductible immediately or over time depending on loan structure.
- HELOC and home equity loan interest is only deductible when used for home improvements.
- Rental properties can offer layered tax advantages through deductions and depreciation.
- Arizona allows some homeowners to itemize at the state level even without federal itemizing.
- Mortgage rates are influenced by global markets, with even small increases impacting affordability and buyer behavior.
To learn more, visit halpernresidential.com.
