Tax Tips Before the Ball Drops: Real Estate Write-Offs for 2025

With the holiday season in full swing, taxes are probably the last thing on your mind. But as we approach the December 31st finish line, there is a narrow window of opportunity to maximize your real estate write-offs for the 2025 tax year.

Whether you just bought your first home, sold a property, or are holding onto an investment, a few strategic moves now could save you thousands when you file in April.

Here is your end-of-year checklist to ensure you aren’t leaving money on the table.

1. The “Green” Credits: Use Them or Lose Them

The most actionable tip for December is the Energy Efficient Home Improvement Credit. Under the Inflation Reduction Act, these limits reset annually. If you haven’t used your 2025 allowance yet, you can’t roll it over to 2026.

• The Limit: You can claim up to $3,200 per year for qualified upgrades.

• The Breakdown:

  • Up to $1,200 for envelope improvements (insulation, exterior doors, and energy-efficient windows).

  • Up to $2,000 specifically for qualified heat pumps and biomass stoves.

• The Deadline: The equipment must be placed in service (installed and working) by December 31, 2025. Buying the windows now and installing them in January won’t count for this year’s return.

2. Property Tax & Mortgage Interest (SALT)

For many homeowners, the Standard Deduction has become the default choice due to inflation adjustments. However, if you have high mortgage interest or significant charitable donations, itemizing might still be your winner.

• Mortgage Interest: You can deduct interest on up to $750,000 of mortgage debt (for loans taken out after Dec 2017).

• SALT Cap: Remember that the deduction for state and local taxes (including property taxes) is generally capped at $10,000.

• Pre-payment Tip: If you are close to the itemizing threshold, consider prepaying your final property tax bill (usually due in January) before December 31st to pull that deduction into the 2025 tax year.

3. For Investors: Repairs vs. Improvements

If you own rental property, understanding the difference between a “repair” and an “improvement” is critical before the year ends.

• Repairs (Current Year Deduction): Fixing a broken pipe, patching a roof leak, or repainting a room. These are fully deductible now. If you have maintenance to do, do it before Dec 31.

• Improvements (Depreciation): Adding a new room, replacing the entire roof, or installing a new HVAC system. These must be depreciated over several years (27.5 years for residential).

• Bonus Depreciation Alert: For 2025, “bonus depreciation” (the ability to write off a chunk of an asset immediately) has phased down to 40%. If you are planning a major capital expenditure, talk to your CPA about whether it makes sense to do it now or wait, depending on your income brackets for this year vs. next.

4. Sold a Home in 2025?

If you sold your primary residence this year, double-check your eligibility for the Capital Gains Exclusion.

• The Rule: You can generally exclude up to $250,000 (single) or $500,000 (married) of profit from capital gains tax, provided you lived in the home for two of the last five years.

• The Write-Offs: Did you pay for staging, major repairs to pass inspection, or agent commissions? These closing costs reduce your taxable gain. Gather those receipts now so you aren’t scrambling in April.

Disclaimer: I am a real estate expert, not a CPA. Tax laws are complex and subject to individual circumstances. Please consult with a qualified tax professional before making financial decisions.

Bottom Line

The difference between a repair and an improvement, or an installation date of Dec 31 vs. Jan 1, can mean a significant difference in your refund. Take an hour this week to review your home expenses—your future self will thank you.

Would you like a recommendation for a trusted local CPA to help you prepare for tax season? Reply “CPA” and I’ll send over my shortlist.