Finish Strong, Start Ready: A Guide for Homeowners and Homebuyers
January feels like the starting line for organizing your finances in the coming year, but preparation in November and December can set you up for success in the new year.
It pays to understand your potential tax advantages before the clock runs out on 2026. And if you’re planning to purchase, refinance, or tap into your home’s equity in 2027, preparing now will ensure you’re ready to act when the timing is right.
Know What You Can Claim
Much is said about the tax benefits of homeownership. This is the time of year to make sure you’re taking full advantage of them. Here are some highlights, but you’ll want to talk to your tax advisor to determine the best option for your situation.
The interest tax deduction. If you itemize on your tax return, you may be able to deduct mortgage interest on loans up to $750,000 or up to $1,000,000 for loans closed prior to December 15, 2017. Interest may also be deductible on home equity loans if the funds were used for home improvements.
If you have a fixed-rate loan, you will receive the greatest benefit from this deduction in your first year, when interest payments are highest. For example, the first-year interest on a $350,000 30-year fixed rate loan at 6.5% is a bit less than $23,000. If you itemize and have an effective tax rate of 20%, that interest paid could potentially save you as much as $4,600 on your tax bill.
Property tax deduction. If you itemize, the SALT cap (maximum State and Local Tax deduction) increased from $10,000 to $40,400, phasing out for higher income levels. The cap will continue to increase by about 1% a year through 2029. If you live in a high-tax state and have stopped itemizing, you may want to revisit the calculation with your tax advisor.
Energy efficiency credits. Unfortunately, the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit both expired at the end of 2025. One remaining federal credit applies to home EV charging equipment purchased before June 30, 2026. State programs may still be available, too, so the topic is still worth a conversation with your tax advisor.
Capital gains tax exclusions. If you sold a home in 2026 or are planning to sell in 2027, here’s what you need to know. Sellers can exclude up to $250,000 of capital gains on the sale of a primary residence ($500,000 for married filing jointly). To claim the exclusion, you must have owned and lived in the home as your primary residence for at least two of the past five years. If there’s a possibility you will owe capital gains taxes, your tax advisor can help you navigate your situation. Remember to keep records of capital improvements made over the years because those can reduce the total of your gain.
Your 2027 Starts Now
New Year’s goals have the potential to include home financing more often than expected. Maybe you want or need to move. Even homeowners with low rates are finding that life events or lifestyle changes are pushing them toward a new home. First-time buyers are moving forward with plans, too. In fact, first-time buyers accounted for more than half of all purchase loans closed in March 2026, the highest share since 2020. That share includes about two-thirds of FHA and VA loans, matching a five-year high.[1]
Home financing supports goals beyond home purchases. Equity tapped through a HELOC (home equity line of credit), a HELoan (home equity loan), or a cash-out refinance can fund renovations, investments, or debt consolidation. In August 2026, homeowner equity reached $18 trillion for the first time, so there’s significant wealth available.[2]
Whatever your 2027 goals look like — whether you’re buying, moving, or accessing equity — the path there runs through your financial profile. Loan underwriters will look at your credit, your income, your assets, and more.
Consider these three categories for preparation:
Polish your financial profile. Request and review your free credit report from AnnualCreditReport.com. If you find errors, talk to your Loan Officer before disputing them. In some cases, revisiting an old issue might not work to your advantage. Before applying for financing, pay down revolving debt and avoid unnecessary credit inquiries.
Get your paperwork in order. Start saving your W-2s, federal tax returns, pay stubs, and bank statements in one folder (digital or paper). If you are self-employed or earn a significant portion of your income from the gig economy, talk to your lender early about the documentation you will need.
Know where you stand. Talk to your Loan Officer, even if you’re not planning to take action right away. If you currently own a home, your Loan Officer can help you estimate its current value and your available equity. If you’re preparing to purchase, a pre-qualification or pre-approval can help you understand how much home you may be able to afford and how much you’ll need for a down payment. A pre-approval can also give you a competitive advantage when you enter the market.
The year-end hustle has a way of making the future feel both exciting and a little overwhelming. The people who make things happen in 2027 won’t be the ones who simply got lucky. They’ll be the ones who spent a quiet winter afternoon getting their financial house in order. That could be you.
Source:
ICE Mortgage Monitor, May 2026.
ICE Mortgage Monitor, August 2026.
Comments