How Mortgage Interest Affects Your Tax Return
Buying a home comes with big financial changes—and one of the biggest tax perks is the mortgage interest deduction. If you’re a homeowner, here’s how this deduction can work in your favor at tax time
🔍 What Is the Mortgage Interest Deduction?
When you pay interest on your mortgage, the IRS may allow you to deduct that amount from your taxable income—lowering what you owe in taxes. This is especially helpful in the early years of your loan when interest makes up a large portion of your payments.
📉 How Much Can You Deduct?
You can deduct interest on up to $750,000 of mortgage debt if you’re filing jointly (or $375,000 if filing separately). If your mortgage started before December 15, 2017, you might be able to deduct interest on up to $1 million in debt.
📋 Itemizing Is Key
To take advantage of this deduction, you’ll need to itemize your deductions using Schedule A on your tax return. If your itemized deductions (including mortgage interest, property taxes, etc.) don’t exceed the standard deduction, it may not be worth itemizing.
🧾 Where to Find the Info
Your lender will send you Form 1098 showing how much mortgage interest you paid. Keep this form handy when filing!
💡 Why It Matters
The mortgage interest deduction can significantly reduce your taxable income—especially for new homeowners or those in high-interest loans. It’s one of the most common and useful tax breaks for property owners.
✅ Tip: Talk to a tax professional to see if itemizing makes sense for you and to ensure you’re maximizing your deductions!