Mortgage interest is deductible only if you itemize deductions on your tax return, and only on loans up to $750,000 of the home's purchase price
You can deduct the interest you pay on a mortgage, but not automatically. The deduction exists only if you choose to itemize deductions on Schedule A of your tax return instead of taking the standard deduction. Most taxpayers take the standard deduction because it is larger than their itemized deductions combined. If your mortgage interest plus other deductible expenses (property taxes, charitable donations, medical costs) add up to more than the standard deduction for your filing status, itemizing makes sense.
The mortgage must be a loan secured by your home — a primary residence, second home, or investment property. The loan cannot exceed $750,000 of the home's purchase price. If you took out a mortgage before December 16, 2017, the limit was $1,000,000, and that higher limit still applies to those older loans. Interest on home equity lines of credit (HELOCs) and cash-out refinances is not deductible unless the money was used to build, buy, or substantially improve the home.
You report mortgage interest on Form 1098, which your lender sends to you and the IRS by January 31 each year. The form shows how much interest you paid in the prior tax year. You do not have to do anything to receive it — your lender generates it automatically if you paid at least $600 in interest.
Key Takeaways
- Mortgage interest is deductible only if you itemize deductions on Schedule A, which most taxpayers do not do because the standard deduction is larger.
- The deduction applies only to loans of $750,000 or less of the home's purchase price; loans taken out before December 16, 2017 can use the $1,000,000 limit.
- Your lender sends Form 1098 showing the interest you paid; you use this figure when you itemize on your tax return.
- Interest on home equity lines of credit and cash-out refinances is not deductible unless the borrowed money was used to improve the home itself.
When itemizing makes sense versus taking the standard deduction
The standard deduction for 2024 is $14,600 for single filers and $29,200 for married filing jointly. If your mortgage interest alone is less than these amounts, itemizing will not help you — you will get a larger deduction by taking the standard amount. But if you also have significant property taxes, state income taxes (capped at $10,000 total), charitable donations, or medical expenses, the combined total might exceed the standard deduction.
Use a worksheet or tax software to add up all your potential itemized deductions. If the total is higher than the standard deduction for your filing status, itemize. If it is lower, take the standard deduction and do not report mortgage interest separately. You cannot do both in the same year.
How to report mortgage interest on your tax return
If you decide to itemize, you will report mortgage interest on Schedule A (Form 1040), which is part of your federal tax return. Line 8a of Schedule A is for mortgage interest you paid on your primary home and second home. Line 8b is for mortgage interest paid on loans used to buy, build, or improve investment property.
Gather your Form 1098 from your lender and enter the amount shown in Box 1 (mortgage interest paid). If you paid off a mortgage during the year or paid interest to a lender who did not send a Form 1098, you may need to calculate the interest yourself using your loan statements. Add up all mortgage interest from all properties you own, then enter the total on the appropriate line of Schedule A.
After you complete Schedule A, the total of all your itemized deductions transfers to your main tax return (Form 1040). This reduces your taxable income, which in turn reduces the income tax you owe.
Mortgage interest you cannot deduct
Interest on a home equity line of credit (HELOC) is not deductible unless you used the borrowed money to build, buy, or substantially improve the home. If you borrowed against your home's equity to pay off credit card debt, pay for a car, or cover living expenses, that interest does not may have access to.
Interest on a cash-out refinance is also not deductible unless the cash was used for home improvement. For example, if you refinanced your $300,000 mortgage for $350,000 and used the extra $50,000 to renovate your kitchen, only the interest on the original $300,000 is deductible. The interest on the $50,000 is not.
Interest on a loan for a rental property or investment property is deductible, but you report it differently — on Schedule E (Supplemental Income and Loss) rather than Schedule A. Interest on a loan for a vacation home or second home that you own but do not rent out is deductible on Schedule A, just like your primary residence.
What happens if you did not receive Form 1098
If you paid mortgage interest but your lender did not send you a Form 1098, you can still deduct the interest if you itemize. Lenders are required to send Form 1098 only if you paid at least $600 in interest during the year. If you paid less, the lender may not send the form, but you can still report the interest you paid.
Check your loan statements to find the total interest paid during the year. Add up the interest from each monthly payment or look for an annual interest summary your lender may provide online. Enter this amount on Schedule A even without the Form 1098. Keep your loan statements as documentation in case the IRS asks questions.
State and local tax treatment of mortgage interest
Most states allow you to deduct mortgage interest on your state income tax return if you itemize on your federal return. A few states do not have an income tax (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming), so there is no state deduction to claim. Other states follow federal rules closely, while some have their own limits or restrictions.
Check your state's tax instructions or contact your state tax authority to learn whether mortgage interest is deductible on your state return and whether any limits apply. Some states cap the deduction or phase it out at higher income levels.
Frequently Asked Questions
Can I deduct mortgage interest if I take the standard deduction?
No. The standard deduction and itemized deductions are mutually exclusive — you choose one or the other each year. If you take the standard deduction, you cannot also deduct mortgage interest. You can deduct mortgage interest only if you itemize deductions on Schedule A and your total itemized deductions exceed the standard deduction for your filing status.
What if I paid off my mortgage early or refinanced during the year?
You can deduct the interest you paid during the months you held the mortgage. Your Form 1098 will show only the interest paid in that calendar year. If you refinanced, you may receive two Form 1098s — one from your old lender and one from your new lender. Add the interest from both forms when you itemize.
Can I deduct interest on a loan I took out to buy investment property?
Yes, but you report it on Schedule E (Supplemental Income and Loss), not on Schedule A. This deduction is available whether you itemize or not. The interest reduces your rental income, which lowers the taxable income you report from that property.
Does my spouse need to be on the mortgage for me to deduct the interest?
No. If you are married filing jointly and either spouse paid mortgage interest on a home you own, you can deduct that interest on your joint return. The person whose name is on the mortgage does not have to be the one who deducts it, as long as you file jointly and both spouses consent.
What if I paid points to lower my interest rate?
Points paid to reduce your mortgage interest rate are generally deductible, but the rules depend on whether the points were paid upfront or rolled into the loan. Points paid upfront on a purchase or refinance of your primary home can usually be deducted in the year paid. Points on a refinance of a second home or investment property must be deducted over the life of the loan. Consult a tax professional or IRS Publication 936 for your specific situation.