Yes, you can deduct mortgage interest, but only if you itemize deductions and meet specific conditions

You can deduct the interest portion of your mortgage payments on your federal tax return, but the deduction is only available if you itemize deductions rather than take the standard deduction. Most homeowners who bought before 2018 can claim this deduction. If you bought after December 31, 2017, the rules are stricter: you can only deduct interest on the first $750,000 of mortgage debt (or $375,000 if married filing separately). The interest must be on a loan secured by your home — a primary residence, second home, or home equity loan used to buy, build, or improve that home.

The deduction applies only to the interest you pay, not the principal. When you make a mortgage payment, part goes toward interest and part toward principal. Your lender sends you a Form 1098 each January showing how much interest you paid in the previous year. You report this on Schedule A (Form 1040) when you file your return.

Key Takeaways

  • Mortgage interest is deductible only if you itemize deductions on Schedule A, not if you take the standard deduction.
  • For mortgages taken out after December 31, 2017, you can deduct interest only on the first $750,000 of debt ($375,000 if married filing separately).
  • Your lender provides Form 1098 showing the interest you paid; you use this figure on your tax return.
  • Interest on home equity loans is deductible only if the loan was used to buy, build, or improve the home itself.
  • You must own the home and be legally liable for the mortgage debt to claim the deduction.

When itemizing deductions makes sense

The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly. If your mortgage interest plus other deductible expenses (property taxes, state and local taxes, charitable donations, medical expenses) add up to more than the standard deduction, itemizing saves you money. If they don't, you're better off taking the standard deduction.

Many homeowners with mortgages under $300,000 find that their itemized deductions don't exceed the standard deduction, especially after the 2017 tax law changes. A tax professional or tax software can calculate both scenarios for you to see which produces a larger deduction.

The $750,000 mortgage debt limit for newer loans

If you took out your mortgage on or before December 31, 2017, you can deduct interest on up to $1,000,000 of debt. If you took it out after that date, the limit is $750,000. This limit applies to the total of all mortgages on your home — if you have a primary mortgage and a home equity line of credit, both count toward the $750,000 cap.

The limit also applies if you refinanced after December 31, 2017. If you refinanced a pre-2018 mortgage for more than the original loan amount, only the interest on the original amount qualifies for the higher $1,000,000 limit. Interest on the additional amount falls under the $750,000 cap.

Home equity loans and lines of credit

Interest on a home equity loan or home equity line of credit (HELOC) is deductible only if you used the borrowed money to buy, build, or substantially improve the home that secures the loan. If you borrowed against your home's equity to pay off credit cards, fund a vacation, or pay for a car, that interest is not deductible.

The $750,000 limit applies to home equity debt as well. If you have a $600,000 primary mortgage and a $200,000 home equity loan, only $150,000 of the home equity loan interest is deductible (because the total debt is $800,000, which exceeds the $750,000 cap).

What Form 1098 tells you and what to do with it

Your lender mails Form 1098 (Mortgage Interest Statement) by January 31 each year. Box 1 shows the total mortgage interest you paid in the previous year. This is the figure you report on Schedule A, line 8a. You should receive this form for any year you paid $600 or more in mortgage interest.

Keep your Form 1098 with your tax records. If you don't receive one and you paid mortgage interest, contact your lender to request it. If you paid interest to multiple lenders (for example, a primary mortgage and a home equity loan), you'll receive multiple forms — add all the interest amounts together on your return.

Situations where you cannot claim the deduction

You cannot deduct mortgage interest if you take the standard deduction instead of itemizing. You also cannot deduct interest if you don't own the home or aren't legally liable for the debt — for example, if someone else holds the mortgage in their name only, even if you live there and make the payments.

Interest on a mortgage used to buy investment property or a rental home is not deductible as a personal tax deduction, though it may be deductible as a business expense if you're operating the property as a rental business. Interest on a loan used to buy a home you don't live in (such as a vacation home you rent out) also follows different rules.

Keeping records and working with a tax professional

Save your Form 1098 and your mortgage statements for at least three years. The IRS can audit returns going back that far, and you'll need to show proof of the interest you paid. If you refinanced during the year, you may receive multiple forms from different lenders — keep all of them.

Tax software like TurboTax, H&R Block, or TaxAct will walk you through entering your Form 1098 information. If your situation is complex — multiple properties, a refinance mid-year, or uncertainty about whether you should itemize — a tax professional can review your specific numbers and may support you're claiming the deduction correctly.

Frequently Asked Questions

Can I deduct mortgage interest if I take the standard deduction?

No. The mortgage interest deduction is only available if you itemize deductions on Schedule A. If your itemized deductions don't exceed the standard deduction for your filing status, you cannot claim the mortgage interest deduction.

What if I paid off my mortgage early or made extra principal payments?

You can only deduct the interest portion of your payments, not the principal. Your Form 1098 shows exactly how much interest you paid. Extra principal payments reduce your loan balance faster but do not increase your deductible interest.

Can I deduct interest on a home equity loan I used to pay off credit card debt?

No. Home equity loan interest is deductible only if you used the money to buy, build, or improve the home itself. Interest on borrowed funds used for other purposes — including paying off other debts — is not deductible.

Do I need to report mortgage interest if I didn't receive a Form 1098?

If you paid $600 or more in mortgage interest, your lender is required to send Form 1098. If you didn't receive one, contact your lender. If you paid less than $600, you can still deduct the interest, but you'll need to calculate it yourself using your mortgage statements and report it on Schedule A.

If I refinanced mid-year, do I get two Form 1098s?

Yes, typically you'll receive one form from your original lender showing interest paid before the refinance, and another from the new lender showing interest paid after. Add both amounts together when you report your deduction on Schedule A.