Recent tax updates have made buying or owning property in San Francisco a little friendlier. In summer 2025, Congress approved three changes that increase how much state and local tax you can deduct, restore the mortgage insurance deduction, and lock in the $750,000 limit for mortgage interest deductions.
Below is the quick-read version for SF Bay Area homeowners and homebuyers, written by your favorite team of top San Francisco Realtors. 😉
A bigger SALT deduction, a revived mortgage insurance write-off, and a permanent $750K interest cap directly lower many local tax bills.
San Francisco property tax and income tax bills are famously high, so any federal break has real impact. Together, the new rules can shave thousands from itemized returns - cash you can keep for renovations, reserves, or a faster mortgage payoff. Even better, clear numbers make planning straightforward instead of guesswork.
You can now deduct up to $40,000 of state and local taxes through 2029 - quadruple the old cap.
Starting with your 2025 return, the state and local tax (SALT) deduction cap jumps from $10,000 to $40,000 for joint filers ($20,000 filing separately) and ticks up 1 percent annually until 2029 before dropping back to $10,000 in 2030. Given average SF property-tax bills and state income taxes, many households will finally deduct their full payments again.
The smart move is to keep every property-tax receipt. If your itemized total beats the standard deduction, you’ll want those numbers ready when your CPA runs the comparison.
If you’re thinking of selling and wondering how these changes affect listing strategy, see our services for San Francisco home sellers page.
PMI, FHA MIP, VA funding fees, and USDA guarantee fees are all permanently deductible, subject to income limits.
Homebuyers who put down less than 20 percent often pay mortgage insurance (PMI). That cost is finally deductible again and no longer set to expire. When the write-off last existed in 2021, qualified taxpayers claimed an average $2,364 deduction. This time it’s permanent, helping first-time and low-down-payment buyers lower their effective interest rate.
SF homebuyers can run updated cost-of-ownership math that accounts for the deduction. Your buying power may improve a bit. For more on the process and how we can work together, see our resources for San Francisco home buyers.
You can keep writing off interest on the first $750,000 of mortgage debt. No sunset, no shrinkage.
High-cost housing markets like SF real estate need predictable rules. Making the $750K mortgage interest deduction permanent removes the “what if” around refinancing or upgrading. These tax updates help to clarify the financial picture for consumers.
Want some real-world examples? Browse our San Francisco real estate success stories for recent client wins.
Bigger deductions boost affordability for upper-middle-income buyers and may support home prices.
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Organize records, run new projections, and talk to your tax pro before the next filing season.
Here’s what you can do to get the most from these recent tax updates:
Disclaimer: We’re a team of top real estate agents in San Francisco since 2002, not tax attorneys or CPAs. Always confirm how these rules apply to your specific situation with a qualified tax professional.
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