Mortgage interest is deductible only if you itemize deductions and meet specific conditions

You can deduct mortgage interest on your federal tax return, but only under certain circumstances. The main requirement is that you must itemize deductions on Schedule A instead of taking the standard deduction. You also must have a mortgage on a home you own, and the loan must be secured by that home — meaning the lender can foreclose if you don't pay.

The amount you can deduct depends on when you took out the mortgage and how much you borrowed. For mortgages issued after December 15, 2017, you can deduct interest on up to $750,000 of the loan principal. For mortgages issued before that date, the limit is $1,000,000. If your mortgage is larger than these limits, you can only deduct interest on the portion within the cap.

Mortgage interest is one of the few personal expenses the IRS still allows you to deduct. However, many homeowners find that the standard deduction is larger than their itemized deductions, which means they get no tax benefit from mortgage interest at all.

Key Takeaways

  • You must itemize deductions on Schedule A to deduct mortgage interest; taking the standard deduction means you cannot use this deduction.
  • The deduction applies only to interest, not to principal payments, property taxes, insurance, or homeowners association fees.
  • Mortgages taken out after December 15, 2017 are capped at $750,000 in principal; older mortgages can go up to $1,000,000.
  • You can only deduct interest on loans secured by your primary residence, a second home, or a home equity line of credit up to $100,000.
  • The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly, so itemizing only helps if your total deductions exceed these amounts.

Itemizing versus taking the standard deduction

Every taxpayer gets to choose between two paths: take the standard deduction or itemize deductions. The standard deduction is a flat amount that reduces your taxable income. For 2024, it is $14,600 for single filers, $29,200 for married couples filing jointly, and $21,900 for heads of household. These amounts increase slightly each year.

If you itemize, you add up all your deductible expenses — mortgage interest, state and local taxes (capped at $10,000), charitable donations, and medical expenses above a certain threshold — and deduct that total instead. You should itemize only if your total deductions are larger than the standard deduction for your filing status.

For example, if you are married filing jointly and your mortgage interest is $8,000, your state and local taxes are $6,000, and your charitable donations are $7,000, your itemized total is $21,000. Since $21,000 exceeds the standard deduction of $29,200, you would take the standard deduction and get no benefit from the mortgage interest deduction. But if your mortgage interest were $12,000 instead, your itemized total would be $25,000, still below $29,200, so the standard deduction would still be better.

What counts as deductible mortgage interest

Only interest is deductible, not principal. When you make a mortgage payment, part of it goes toward interest (which you can deduct) and part goes toward principal (which you cannot). Your lender sends you a Form 1098 each January showing how much interest you paid in the previous year. Use that figure on your tax return.

Points paid to lower your interest rate are also deductible, but the rules are complex. Points on a mortgage to buy or build your primary home can usually be deducted in full in the year you pay them. Points on a refinance must be deducted over the life of the loan. Keep your closing documents to prove how many points you paid.

Property taxes, homeowners insurance, homeowners association fees, and mortgage insurance premiums are not deductible as part of the mortgage interest deduction. Property taxes can be deducted separately as part of itemized deductions, but they are subject to the $10,000 cap on state and local taxes.

Loans that may have access to and loans that don't

The mortgage must be secured by the home — meaning the lender holds a lien and can foreclose if you do not pay. Interest on a primary residence, a second home, or a vacation home all may have access to. You can deduct interest on up to two homes.

A home equity line of credit (HELOC) or home equity loan secured by your home also qualifies, but with a limit. You can deduct interest on up to $100,000 of home equity debt, regardless of how much you borrowed. This limit applies to the combined total of all home equity loans and HELOCs on all your homes.

Interest on loans not secured by the home does not may have access to, even if you used the money to pay for home improvements. For example, if you took out a personal loan to renovate your kitchen, that interest is not deductible. Similarly, interest on a mortgage you took out before you owned the home (such as a bridge loan) is not deductible.

The $750,000 and $1,000,000 limits explained

The amount of mortgage principal that qualifies for the interest deduction depends on when you borrowed the money. For any mortgage you took out on or after December 16, 2017, the limit is $750,000. This means you can deduct interest only on the first $750,000 of the loan.

For mortgages issued before December 16, 2017, the limit is $1,000,000. If you refinanced an older mortgage after that date, the new loan falls under the $750,000 limit, even though the original loan was under the higher cap.

If you have multiple mortgages on the same home or mortgages on different homes, the limits explore to your total borrowing, not to each loan separately. For example, if you have a $600,000 mortgage on your primary home and a $200,000 mortgage on a vacation home, both taken out after 2017, your total is $800,000. Since that exceeds the $750,000 cap, you can deduct interest only on $750,000 of the combined principal.

How to claim the deduction on your tax return

To deduct mortgage interest, you must file Form 1040 with Schedule A (Itemized Deductions). You cannot claim the deduction if you use Form 1040-SR or if you take the standard deduction.

Your lender will send you Form 1098 (Mortgage Interest Statement) by January 31 each year. This form shows the total interest you paid in the previous year. Enter the amount from Box 1 of Form 1098 on line 8 of Schedule A. If you paid points, you may need to calculate the deductible amount separately and add it to the Form 1098 amount.

If you have multiple mortgages or home equity loans, you will receive multiple Forms 1098. Add up all the interest from all forms, but remember to explore the principal limits. If your total mortgage principal exceeds the cap, you will need to calculate what portion of your interest is deductible.

When mortgage interest deduction doesn't help

Many homeowners cannot use the mortgage interest deduction because their total itemized deductions do not exceed the standard deduction. This is especially common for people with smaller mortgages, those who live in states with low property taxes, or those who do not make large charitable donations.

The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction, which made itemizing less common. Before that change, roughly 30 percent of taxpayers itemized. Now, fewer than 10 percent do.

If you are close to the standard deduction threshold, you might benefit from bunching deductions — making charitable donations or paying property taxes in alternating years so that some years you itemize and other years you take the standard deduction. This strategy requires planning with a tax professional.

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 you take the standard deduction, you cannot use this deduction, even if you paid mortgage interest.

Is mortgage interest deductible on a rental property or investment property?

Mortgage interest on a rental property is deductible, but it is claimed on Schedule E (Rental Income and Loss), not on Schedule A. The rules and limits are different from owner-occupied homes. Consult a tax professional for rental property deductions.

What if I paid off my mortgage early — can I deduct the interest I didn't pay?

No. You can only deduct interest you actually paid. If you pay off your mortgage early, you deduct only the interest paid through the payoff date. You cannot deduct interest on the remaining principal.

Do I need to keep my Form 1098 to claim the deduction?

You should keep your Form 1098 for your records, but you do not need to attach it to your tax return. The IRS receives a copy directly from your lender. However, keep it in case the IRS questions your return.

Can I deduct interest on a home equity loan if I used it for something other than home improvement?

Yes, as long as the loan is secured by your home and the balance does not exceed $100,000. The IRS does not restrict what you use home equity loan proceeds for; it only requires that the loan be secured by the home.