5 Tax Season Mistakes Homeowners (and Future Homeowners) Make Every Year

Tax season is here, and whether you’re gathering W-2s or waiting on that refund, it’s the perfect time to think about your home—or the home you want to buy.

But every year, we see the same mistakes play out. Some cost people thousands in missed deductions. Others delay homeownership by months or even years. And the biggest one? Not using that tax refund strategically.

Let’s break down the most common tax season mistakes and how to avoid them.

Mistake #1: Not Taking Advantage of Homeowner Tax Deductions

If you already own a home, you have access to tax benefits that renters will never see. But you have to actually claim them.

The deductions you might be missing:

Mortgage interest – If you’re paying a mortgage, you can deduct the interest on up to $750,000 of mortgage debt. In the early years of your loan, this can save you thousands.
Property taxes – You can deduct up to $10,000 per year in state and local taxes, including property taxes.
PMI premiums – If you’re paying private mortgage insurance and your income qualifies, that premium may be deductible.
Home office expenses – If you’re self-employed and use part of your home exclusively for work, you can deduct a portion of your mortgage interest, utilities, and maintenance.

The fix: Work with a CPA or tax professional who knows the ins and outs of homeownership deductions. Don’t leave money on the table.

Mistake #2: Letting Your Tax Refund Disappear

The average tax refund is over $3,000. That’s real money. But most people spend it on things they won’t remember six months from now.

If you’re currently renting and thinking about buying a home, your tax refund could be the down payment you’ve been waiting for.

Here’s how it works:

3.5% down on an FHA loan means a $300,000 home requires $10,500 down. Your $3,000 refund covers nearly 30% of that.
Combine your refund with a down payment assistance program (like SNclose™, which provides up to 5% with credit scores as low as 580), and suddenly homeownership isn’t just possible—it’s within reach this spring.
Use it for closing costs if you already have your down payment covered. Closing costs typically run 2-3% of the purchase price, and your refund can knock out a big chunk.

The fix: Don’t let your refund vanish into everyday expenses. Open a separate savings account, deposit the refund, and use it strategically toward homeownership.

Mistake #3: Not Documenting Your Tax Refund Properly (If You’re Buying a Home)

Here’s something most people don’t know: if you’re planning to use your tax refund as part of your down payment, lenders need to see it documented correctly, or it doesn’t count.

Every dollar of your down payment has to be sourced. That means when your refund hits your bank account, your lender will need:

Your complete tax return
IRS deposit confirmation
Bank statements showing the deposit

And here’s the kicker: you can’t just spend it and then explain where it went. If you get a $4,000 refund and immediately spend $1,000 on car repairs, your lender has to document and explain that withdrawal. It creates delays.

The fix: Once your refund hits, treat it like it’s untouchable. Keep it in a separate account, save all documentation, and don’t make random withdrawals. Your future lender will thank you.

Mistake #4: Waiting Too Long to Get Pre-Approved

Here’s the genius move most people miss: get pre-approved BEFORE your tax refund even arrives.

Why? Because if you’re already pre-approved based on what you have saved now, your tax refund becomes a bonus that strengthens your offer when it hits.

Scenario A (the smart way):

You get pre-approved in February with $2,000 saved
Your $3,200 refund arrives in March
Now you have $5,200, and you can offer a larger earnest deposit, bump up your down payment, or have reserves that make sellers more confident

Scenario B (the slow way):

You wait until your refund arrives to call a lender
You start the pre-approval process in April, right when the spring market is heating up
You’re competing with buyers who got pre-approved months ago

The fix: Get pre-approved now. It takes 24-48 hours, and you’ll be in the strongest position when you find the right house.

Mistake #5: Thinking a Smaller Refund Means You Can’t Buy

Not everyone gets a big tax refund. Self-employed folks, people who adjusted their withholdings, or those with side income might get a smaller refund—or even owe money.

That doesn’t disqualify you from buying a home.

What matters is your income, your credit, and your ability to qualify for the right loan program. And there are plenty of options:

Down payment assistance programs help cover 3-5% of your down payment
FHA loans require as little as 3.5% down
VA loans (for veterans) require $0 down
USDA loans (in eligible areas) also require $0 down
Programs for self-employed buyers use bank statements or asset qualification instead of traditional tax returns

Your tax refund can absolutely help, but it’s not the only path forward.

The fix: Talk to a mortgage loan officer about what you actually qualify for. You might be closer to homeownership than you think.

The Bottom Line: Tax Season is Planning Season

Tax season isn’t just about filing forms and waiting for a refund. It’s an opportunity to:

Maximize the tax benefits you already have as a homeowner
Use your refund strategically to move toward homeownership
Get pre-approved early so you’re ready when the right house hits the market
Explore your options even if your refund is smaller than expected

The spring real estate market is already warming up. Inventory is increasing, but so is competition. The buyers who act now are the ones who close deals in March and April.

Ready to explore your options?

Whether you’re getting a $5,000 refund or a $500 one, let’s talk about what’s possible. Get pre-approved, see what you qualify for, and find out how your tax refund can work for you.

Disclaimer: This blog is for educational purposes only and is not tax advice. Consult a licensed tax professional for guidance specific to your situation. SecurityNational Mortgage Company and its loan officers are not tax advisors or CPAs.