The One Big Beautiful Bill Act offers homeowners some deductions to think about: permanent mortgage-interest rules, PMI deductibility starting in 2026, and a quadrupled state and local tax deduction cap through 2029. Taken together, itemizing may be back in play for many taxpayers.
If you’re a homeowner—or advising one—the One Big Beautiful Bill Act (OBBBA) handed you some real opportunities. Private mortgage insurance (PMI) is again deductible starting in 2026. The state and local tax (SALT) deduction cap jumped to $40,000. And the mortgage-interest rules you’ve been working with these past few years? They’re now permanent.
This blog shares what matters most for tax planning through 2029.
Homeowner and Mortgage‑Related Provisions
Permanent Mortgage‑Interest Deduction Rules: The OBBBA makes permanent the Tax Cuts and Jobs Act’s (TCJA) reduced acquisition debt threshold for qualified residence interest (generally $750,000; $375,000 for married filing separately). For many taxpayers, this retains the post2017 framework instead of reverting to prior law limits.
PMI Deductibility Resumes in 2026: Starting in 2026, you can deduct PMI just like mortgage interest—if you itemize. That’s a big deal for first-time home buyers and borrowers still building equity (less than 20%) in their homes who have been paying PMI for years.
Higher SALT Deduction Cap (2025–2029): From 2025 through 2029, the SALT cap jumps to $40,000. It was $10,000 since the TCJA’s 2017 passage. If you live in a high-property-tax state, this change—stacked with mortgage interest and PMI—could make itemizing advantageous again.
Refinancing and Home-Equity Loans: Refinancing and home-equity loans still qualify for deductions when you use the money to improve your home.
Practical Considerations
Reevaluate Itemizing for 2026–2029: Since the TCJA expanded the standard deduction, only 10% to 15% of taxpayers have elected to itemize. But with PMI back in play, mortgage interest still deductible, and the SALT cap quadrupled? Expect that number to rise significantly—especially in high-cost, high-tax states. Refresh multiyear projections that compare itemized vs. standard deductions. Focus on clients with significant property taxes, PMI (beginning 2026), and sizable mortgage interest.
Mind the Acquisition‑Debt Rules: Interest is deductible only when you use a loan to buy, build, or substantially improve your home—and the loan must be secured by that home. Keep accurate records of how you used the funds and how much you spent. Consider these examples:
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Took out a home-equity loan to remodel your kitchen and add a bathroom? That’s acquisition debt, so interest is likely deductible.
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Used a home-equity loan to pay off credit cards or cover personal expenses? Not acquisition debt, therefore interest isn’t deductible.
How AnnieMac Programs Can Support Tax Opportunities
Home‑Equity Options: Home-equity financing is a smart move when you’re funding major improvements that count as acquisition debt. You preserve the tax deduction and boost your home’s value.
Refi Radar: Refi Radar shows whether refinancing can cut your total interest and roll qualifying acquisition debt together. Combine that analysis with your CPA’s advice on timing and paperwork.
Cash2Keys and Buy Now, Sell Later: These programs strengthen your purchase with cash-backed offers and give you flexibility when selling your current home. Bonus: When the financing qualifies as acquisition debt, you maintain deductibility.
Final Thoughts
The OBBBA gives homeowners some big wins: permanent mortgage-interest rules, PMI deductibility starting in 2026, and a quadrupled SALT cap through 2029. Together, they’re likely to bring itemizing back into play for many taxpayers.
CPAs, now is the time to refresh your 2026–2029 projections. Loop in your lending partners, and make sure your clients’ debt structures line up with the acquisition-debt rules.
Steve Rossman, CPA, is a mortgage loan originator with AnnieMac Home Mortgage. He has more than 30 years of experience as a CPA advising individuals and business owners, and now helps homebuyers and homeowners navigate financing with a clear, client-first approach. He can be reached at srossman@annie-mac.com.
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Statements of fact and opinion are the author's responsibility alone and do not imply an opinion on the part of the PICPA's officers or members. The information contained herein does not constitute accounting, legal, or professional advice. For actionable advice, you must engage or consult with a qualified professional.
