Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our opinions or reviews. Learn how we make money.

Mortgage interest deduction

This tax deduction helps homeowners lower their tax bill — but only if you itemize.

Last updated:

Have you paid mortgage interest this year? You could save thousands on your tax bill by taking the mortgage interest deduction. Here’s everything you need to know.

What is the mortgage interest deduction?

The mortgage interest deduction lets homeowners write off interest on the first $1 million of their mortgage debt if their loan originated before December 15, 2017 or $750,000 if it originated after.

The mortgage interest deduction reduces your taxable income dollar for dollar. For example, if you had $50,000 in taxable income and paid $5,000 in mortgage interest, your taxable income would drop to $45,000 if you claim the deduction.

How much is the mortgage interest deduction worth in 2019?

The amount you can claim depends on the year you took out your mortgage. You can deduct 100% of your interest payments as long as your total mortgage debt falls under these limits:

Date you took out mortgageSingle, married filing jointly, head of householdMarried filing separately
Before October 13, 1987No limitNo limit
October 14, 1987 to December 15, 2017Up to $1 millionUp to $500,000
December 16, 2017 to presentUp to $750,000Up to $375,000

Limits

The mortgage interest deduction has the following limitations:

Who qualifies for the mortgage interest deduction?

Nearly everyone with a mortgage qualifies for this deduction. But your deduction amount depends on when you took out your mortgage.

If you took out your mortgage after October 14, 1987, you can write off interest on the first $750,000 or $1 million of your secured loan as long as it’s used to buy, build or sustainably improve your primary or secondary home.

If you took out your mortgage before October 14, 1987, you can deduct 100% of your interest no matter how much your property is worth.

You can also claim the mortgage interest deduction if you:

  • Receive the ministers’ and military housing allowance.
  • Are part of the Hardest Hit Fund and Emergency Homeowners’ Loan programs.
  • Qualify for mortgage assistance payments.
  • Have a home that was destroyed by a fire, storm, hurricane or earthquake and plan to rebuild it or sell the land.

What qualifies for the deduction?

Certain rules apply, but the following items may qualify as mortgage interest:

What qualifies for the mortgage interest deduction?
Home equity line of credit
Homeowners insurance
Interest accrued before selling a home
Late payment charges
Mortgage insurance premiums
Mortgage interest credit
Mortgage prepayment penalties
Mortgage on first home
Mortgage on second home
Mortgage on third or fourth home
Reverse mortgages
Title insurance

How to claim the mortgage interest deduction

Your mortgage company will send you Form 1098 as long as you paid at least $600 in interest. This form lists the amount of deductible interest you can claim.

When you file your tax return, you’ll use Form 1040, Schedule A to claim mortgage interest and other itemized deductions.

What to watch out for

If you’re claiming the mortgage interest deduction, you’ll want to watch out for a few things:

  • Must have lived in rented home. To qualify, you need to live in your second home for at least 14 days or an amount equal to 10% of the days it was rented out — whichever is longer. For example, if your home was rented out for 200 days, you must have lived there for at least 20 days to claim the deduction.
  • Claiming the credit may not be worth it. You’ll save more money if the total of your itemized deductions is lower than your standard deduction limit. If it’s lower, you shouldn’t claim the mortgage interest deduction.

Compare tax filing services

Updated April 9th, 2020
Name Product Federal returns starting price State returns starting price Maximum return guaranteed? Free options available? Photo import of W2? Live chat?
H&R Block
$49.99
$44.99
Yes
Yes
Yes
Yes
File simply and securely with tax software from H&R Block.
Intuit TurboTax
$60
$50
Yes
Yes
Yes
No
File returns electronically and get taken step by step through the tax-filing process, so that you can receive the fastest refund possible for yourself, and/or your business.
Liberty Tax
$27.96
Yes
No
Yes
Yes
Choose from EZ, Basic, Deluxe, and Premium packages to support the simplest or the most complicated of returns; including business and investments.
loading

Compare up to 4 providers

If you qualify for the mortgage interest deduction, you may also qualify for the following deductions:

  • Property tax deduction. If you’ve paid property taxes this year, you can deduct up to $10,000 or $5,000 if you’re married and filing separately.
  • Points deduction. If you bought a home this year, you could deduct discount and origination fee points from your tax bill.

Bottom line

Writing off mortgage interest is a huge perk for homeowners. It reduces the amount of taxes you owe dollar for dollar, and almost everyone qualifies for it. But it may only make sense to claim it if your itemized deduction is higher than your standard deduction limit.

Before you file taxes, consider hiring a professional or using an online service that can help you decide if claiming the mortgage interest deduction makes financial sense for you.

Frequently asked questions

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site