Lesser Tax
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Quick answer: If you bought your first US home on an H-1B or L-1 in 2026, your 2026 return (due April 15, 2027) may be the first year itemizing beats the standard deduction. A home adds mortgage interest on up to $750,000 of loan and property tax, and for 2026 the cap on state and local taxes (SALT) is $40,400. Itemizing only helps if the total clears the 2026 standard deduction: $16,100 single or $32,200 married filing jointly. This applies if you are a resident for tax. Nonresidents filing Form 1040-NR cannot deduct mortgage interest or property tax on their own home.
Key takeaways
- 2026 standard deduction: $16,100 single or married filing separately, $24,150 head of household, $32,200 married filing jointly (IRS Rev. Proc. 2025-32).
- 2026 SALT cap: $40,400 ($20,200 married filing separately). It shrinks by 30% of modified AGI above $505,000 ($252,500 married filing separately), but not below $10,000 ($5,000).
- Mortgage interest is deductible on the first $750,000 of debt used to buy, build or improve your main or second home ($375,000 married filing separately) for loans taken after December 15, 2017.
- Points paid to buy your main home are generally deductible in the year you pay them.
- You need to be a resident for tax (most H-1B and L-1 holders after their first year) and file Form 1040 to get these deductions.
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What changes on your return after you buy?
As a renter, your only big itemized deduction was state income tax, and that alone rarely beat the standard deduction. A home adds new items to Schedule A:
- Home mortgage interest. Your lender sends Form 1098 in January showing the interest you paid in 2026. Interest on up to $750,000 of acquisition debt is deductible. Loans from before December 16, 2017 keep the older $1 million limit.
- Property tax. Your real estate tax goes into the same SALT bucket as state income tax (or sales tax, if you choose that instead). For 2026 the bucket is capped at $40,400.
- Points. Points you paid at closing on the purchase of your main home are generally deductible in the year paid. Other closing costs, such as title insurance, appraisal and recording fees, are not deductible. They are added to your cost basis instead, which helps when you sell.
When does itemizing beat the standard deduction?
Add up mortgage interest, SALT (up to the cap) and charitable gifts. If the total is above your standard deduction, itemize. If not, take the standard deduction and the house does not change your federal tax this year.
Here is a worked example with rounded, illustrative figures. A married couple in California, both on H-1B, earns $380,000 together. In January 2026 they buy an $850,000 home with a $650,000 mortgage at 6.5%.
| Line (2026, married filing jointly) | Amount |
|---|---|
| Mortgage interest (Form 1098, year one) | About $42,000 |
| Property tax (about 1.1% of $850,000) | About $9,350 |
| California income tax withheld | About $22,000 |
| SALT total ($31,350, under the $40,400 cap) | $31,350 |
| Itemized deductions total | About $73,350 |
| 2026 standard deduction | $32,200 |
| Extra deduction from itemizing | About $41,150 |
Itemizing gives them about $41,150 more in deductions than the standard deduction. At their 24% bracket, that is roughly $9,900 less federal tax for 2026. Because their modified AGI is under $505,000, they get the full $40,400 SALT cap.
A single H-1B buyer with a smaller loan may not clear $16,100 at all. Run the numbers before assuming the house lowers your tax.
Does your visa status change any of this?
The deductions follow your tax residency, not your visa type.
- Resident for tax (you passed the substantial presence test): you file Form 1040 like a US citizen and can choose the standard deduction or itemize. Everything above applies.
- Nonresident for tax (for example, your first months on an H-1B, or an F-1 student in the exempt years): you file Form 1040-NR. You generally cannot take the standard deduction, and your itemized deductions are limited to items such as state and local income tax and charitable gifts. Mortgage interest and property tax on your personal home are not deductible on Form 1040-NR. Students and business apprentices from India can claim the standard deduction under the India-US tax treaty.
- Dual-status (the year you arrived or left): no standard deduction on the dual-status return. In some cases you can choose to be treated as a resident for the whole year, for example by filing jointly with a resident spouse. See resident alien vs nonresident alien and ITIN for an H-4 spouse.
Other filings a home purchase can trigger
- Gifts from parents in India. If your parents sent money for the down payment and gifts from foreign individuals totaled more than $100,000 in 2026, you file Form 3520 with your return. There is no tax on the gift, but the penalty for missing the form is steep. See Form 3520 for gifts from parents in India and when parents send money for a US house.
- Indian bank accounts. Moving down-payment money through NRE, NRO or FD accounts can push the combined balance above $10,000. If it did at any point in the year, file an FBAR. See India accounts over $10,000 and the FBAR.
- Selling later. If you own and live in the home for at least 2 of the 5 years before a sale, you can exclude up to $250,000 of gain ($500,000 married filing jointly).
What this means for your taxes
Check your status first: resident or nonresident for 2026. If resident, total your Form 1098 interest, points, property tax and state income tax withholding, and compare the result with $16,100 or $32,200. If it is higher, itemize on Schedule A. Keep your closing statement, because points, prepaid property tax and basis all come from it.
This is general information, not advice for your situation. If this is your first year as a homeowner on a visa, Lesser Tax can run the itemize-versus-standard numbers with you: see how Lesser Tax works for NRIs.