Standard versus itemized deduction: Which one should you claim? If this question is weighing heavily on your mind as you file your taxes this year—or you’re wondering what may be in store for 2018 once all the new tax reforms take effect—then let this guide help you decide.

Particularly if you’ve bought a home recently, itemizing your deductions could save you major money when you file, but we’ll break it down to help you make the decision on a standard versus itemized deduction.

What is the standard deduction?

When you file your tax return, you can deduct certain expenses from your taxable income. For instance, if you’re in the 25% tax bracket, every $1,000 in itemized deductions you claim knocks $250 off your taxes.

Nearly 2 out of every 3 tax filers claim the standard deduction, which is essentially a flat-dollar, no-questions-asked reduction to your adjusted gross income. Congress sets the amount of the standard deduction, and it’s typically adjusted each year for inflation.

For 2017, the standard deduction is $6,350 for single filers and $12,700 for married couples filing jointly.

Next year, thanks to the new tax law, it will nearly double, to $12,000 for individuals and $24,000 for joint filers.

Here are some of the benefits to taking a standard deduction:

  • It allows you a deduction even if you have no expenses that qualify as itemized deductions.
  • It eliminates the need to keep records and receipts of your expenses in case you’re audited by the IRS.
  • It lets you avoid having to track medical expenses, charitable donations, and other itemizable deductions throughout the year.
  • It saves you the trouble of needing to understand the nuances of tax law.

What are itemized deductions?

Although claiming the standard deduction is easy and convenient, choosing to itemize can potentially save you thousands of dollars, says Mark Steber, chief tax officer at Jackson Hewitt.

“Don’t be lulled into thinking the standard deduction is always a better answer,” Steber says. That advice especially applies to homeowners.

“Buying a home has the single largest impact on your tax return,” says Steber, adding that a home purchases is “an anchor item that can move someone into the itemized taxpayer category.”

Itemizing your deductions may enable you to deduct these expenses:

  • Home mortgage interest (note the exceptions below)
  • Real estate and personal property taxes
  • State and local income taxes or sales taxes (but not both)
  • Gifts to charities
  • Casualty or theft losses
  • Unreimbursed medical and dental expenses
  • Unreimbursed employee business expenses
  • Miscellaneous expenses (note that this is set to expire in 2018)

Why itemizing often makes sense for homeowners

Under the new law, current homeowners can continue to deduct interest on a total of $1 million of mortgage debt for a first and second home. But new buyers can deduct interest on only $750,000 for a first and second home.

It’s still possible that if you own a home, your mortgage interest alone might exceed the standard deduction, says Steve Albert, director of tax services at CPA wealth management firm Glass Jacobson. In this case, it’s a no-brainer to itemize your deductions. (But whatever the outcome of that calculation this year, make sure to run it again next year.)

This is particularly true if you bought a house recently, since most mortgages are front-loaded to pay mortgage interest rather than whittle down the principal (which is the amount you borrowed).

For instance: If you have a 30-year loan for $400,000 at a fixed 5% interest rate, in the first year of your mortgage, you’ll pay off only $5,901 in principal but a whopping $19,866 in interest. That alone exceeds an individual’s standard $6,350 deduction for 2017, and even the $12,000 deduction for 2018. So whether you’re filing taxes this year or next, itemizing would make total sense.

Plus: If you bought your house in 2017 and paid points—which are essentially a way to prepay interest upfront to lower your monthly mortgage bills—these points count as mortgage interest, too, amounting to more tax savings.

On the other hand, if you’ve owned your home for a while, then your mortgage interest may not amount to much. By the 25th year of that same $400,000 loan, you’ll pay only $6,223 in interest. However, keep in mind that your property taxes are an itemized deduction, too—and combined with mortgage interest and other deductions, could easily push you over the top into itemizing territory. (For 2018, note that taxpayers will be able to deduct a total of only $10,000 in property and income or sales taxes.)

Itemized vs. standard deduction: Which is right for you?

Not sure how much you paid in mortgage interest and property taxes last year? To get a ballpark, you can punch your info into an online mortgage calculator. Also, early in the new year, your mortgage lender should mail you a mortgage interest statement (Form 1098) with the total you paid during the previous year.

“And if you had your property taxes impounded in your loan, your taxes will appear on your 1098 as well,” says Lisa Greene-Lewis, a CPA and tax expert at TurboTax.

Another DIY approach to see if your combined itemized tax deductions are larger than your standard tax deduction is to fill out the IRS Schedule Aform, which outlines all federal itemized deductions line by line.

You can also consult an accountant (you can search for a tax professional in your area using the IRS directory of tax return preparers). But as a general rule, if you bought a home recently, you’re a prime candidate to itemize, so don’t let these potential savings pass you by without checking!