Homeownership can be expensive and may even feel out of reach for many Americans. The down payment, property taxes, maintenance, and utilities, plus mortgage payments and the cost of ownership can really add up. Throw in a real estate market with sky-high home values; you may be wondering if owning a home is worth it. Luckily, there are a few tax deductions for homeowners that can help make homeownership a bit more affordable.

Keep reading to find out more about the various tax deductions available to home buyers and current homeowners. With record low mortgage rates, some of these deductions may be less valuable than they were in the past, especially when paired with skyrocketing real estate values in much of the country.

The Tax Cut and Jobs Act (TCJA aka Trump Tax Plan) surprisingly reduced the tax benefits of owning a home for millions of Americans. The mortgage deduction, long the darling of tax breaks for homeowners, was made irrelevant to the overwhelming majority of homeowners. First, the TCJA reduced the amount of mortgage debt that would benefit from the mortgage deduction. Second, it restricted tax deductions for home-equity loans. Third, it eliminated the home office deduction for many American workers. This became especially painful during the COVID-19 pandemic as large swaths of the American workforce suddenly were working from home.

To be fair, some tax deductions for homeowners remain. You could potentially still get a write-off for “mortgage interest” on an RV or potentially a boat. There was some loosening of a rule for retirement account withdrawals to buy a home. (This is something I am against, in most circumstances.)

Here are a few tax questions I often hear from homeowners.

Can I still deduct my mortgage interest? 

I am a financial planner in Los Angeles, so most people I speak to locally will still fall into the pool of homeowners who can deduct their mortgage interest. For much of the country, the answer is – “It depends.”

For the past few years, more than 90% of taxpayers have simply taken the “standard deduction.” This doesn’t mean they weren’t eligible for the mortgage deduction, all the same; it does mean their taxes didn’t go down at all for incurring mortgage interest. For 2021, the standard deduction is $25,100 for filers who are married, filing jointly.

Can I deduct my property taxes?

Again, the answer is yes and no. The TCJA instituted a cap on the deduction for state and local taxes (SALT) at just $10,000 per year. This is regardless of if you are married or single (thanks marriage penalty). I was just reviewing the taxes of my high-income clients in Manhattan, and this change alone was costing them more than $200,000, per year, in lost tax deductions. OUCH! Technically, the first $10,000 of their state and local taxes are deductible. Beyond that, they receive no tax benefits at the federal level.

At current real estate prices, this SALT cap will hit those well below the median home price in Southern California, assuming they have a job to pay for the home. Well, if you don’t have any income – tax deductions don’t matter much.

How much mortgage interest can I deduct in 2021?

For mortgages issued after December 15, 2017, taxpayers can only deduct interest on the first $750,000 of mortgage debt. This debt can be held on up to two homes, which is good news for those who purchased a second home during the COVID pandemic.

For homeowners who’ve had their mortgages longer, specifically those issued before December 15, 2017, a “grandfather” provision allows interest deductions on up to $1 million of mortgage debt, again, on up to two homes.

Note that the $750,000 mortgage limit applies per tax return, so homebuyers who are not married could potentially buy a home (or even 2 homes) together and deduct interest on up to $1.5 million of mortgage debt. (They would also get a total of $20,000 in combined SALT deductions). I work with a lot of long-term gay couples, and a few have made the decision not to get married (at this time) based on the various marriage penalties in the current tax code.

I’m working from home; can I take the home office deduction?

If you are an employee of a company, you are no longer able to take the home office deduction.

However, if you are self-employed or a business owner (this can be part-time or even a side gig), you may be eligible to deduct home office expenses. To qualify for the home office deduction, space must be used regularly and exclusively for that business. Putting your laptop in the middle of your pandemic home gym likely won’t make that space eligible for the home office deduction. Unless perhaps, you are a fitness influencer on social media, using the space to film content.

Can I use my 401(k) or IRA to buy a house?

Congress has made it easier to get access to your retirement accounts for reasons other than retirement. As part of the pandemic relief, you can potentially withdraw up to $100,000 from your IRAs and maybe even your 401(k) without getting hit with the 10% early withdrawal penalty. Taxes will still be due on the withdrawal, but they can be spread over three years. Think long and hard before you mortgage your retirement security to buy a home. Depending on your retirement saving and age, making a $100,000 withdrawal now could add years and years to the time you need to work to fund a secure retirement.

Overall, I’m a fan of homeownership. I have seen the benefits over the long term. I have also seen the devastation that rush purchases can wreak on a family’s household finances. While the various tax breaks can make homeownership more appealing, they should never be the only reason you purchase a home.