Can I Deduct My Mortgage Interest?

Yes, you can deduct your mortgage interest if you itemize deductions on Schedule A, the loan is secured by your main home or one second home, and you used the money to buy, build, or substantially improve that home. Interest on up to $750,000 of that debt is deductible ($375,000 if married filing separately), or up to $1 million ($500,000 married filing separately) for loans taken out before December 16, 2017. The deduction only lowers your tax if your itemized deductions add up to more than your 2026 standard deduction, which is $16,100 for single filers and $32,200 for married couples filing jointly.

The three tests your interest must pass

IRS Publication 936 sets out the conditions. All three must be true for the interest to count as home mortgage interest.

1. You itemize. You list deductions on Schedule A of Form 1040 instead of taking the standard deduction. If you take the standard deduction, you get no separate benefit from mortgage interest.
2. The debt is secured by a qualified home you have an ownership interest in. "Secured" means you signed a mortgage or deed of trust that makes the home collateral and lets the lender take it if you default, and the document is recorded under state law. A qualified home is your main home (where you live most of the time) or one other home you choose to treat as your second home. A house, condo, co-op, mobile home, house trailer, or boat counts if it has sleeping, cooking, and toilet facilities. Both you and the lender must intend that the loan be repaid.
3. The money bought, built, or substantially improved that same home. A substantial improvement adds value, extends the home's useful life, or adapts it to a new use, such as adding a room. Routine repairs like repainting do not count unless they are part of a larger renovation. A loan you take out within 90 days before or after buying the home is treated as used to buy it, up to the home's cost.

A second home you rent out has an extra test. You must use it yourself for more than 14 days, or more than 10% of the days it is rented at a fair price, whichever is longer. If you do not, the IRS treats it as rental property, and its mortgage interest is not home mortgage interest. If you meet the test and rent the home 15 days or more, you generally split the interest between rental and personal use by days; only the personal share goes on Schedule A, and the rental share is a rental expense.

Which loan types qualify

Most mortgage products can pass the tests. What matters is how you spent the money and what secures the loan, not what the lender calls it.

Example of a HELOC split. You draw $60,000 on a HELOC, spend $40,000 on a kitchen remodel, and use $20,000 to pay off a car loan. Only the interest on the $40,000 used for the remodel is deductible. Keep records that show how you spent each draw. For more on how these lines work, see what a home equity line of credit is.

Refinancing. If you owe $280,000 and refinance into a $330,000 loan, the first $280,000 keeps its status as home acquisition debt. The extra $50,000 qualifies only if you spend it substantially improving the home. Points, the upfront fees you pay the lender to lower your interest rate, are usually deducted over the life of a refinance loan. The share of points tied to cash you spend substantially improving your main home can be deducted in the year paid if you meet the IRS tests in Publication 936. See how refinancing a mortgage works for the loan side of that decision.

Interest on a mortgage secured by a rental or investment property is not home mortgage interest, but it may be deductible as a business or investment expense instead.

Where the figure comes from: Form 1098

Your lender or servicer should send Form 1098 by January 31 if you paid $600 or more of interest on one mortgage during the year. The boxes that matter for your return:

• Box 1: mortgage interest you paid during the year. It does not include points.
• Box 2: the outstanding principal as of January 1 (or at origination if the loan is new). You need this to check the debt limit.
• Box 3: the date the loan was originated, which helps tell you whether the $750,000 or $1 million limit applies. If the loan refinanced a mortgage from before December 16, 2017, the older loan's date can still apply to the balance you refinanced.
• Box 5: mortgage insurance premiums, deductible again starting in 2026. The deduction shrinks once adjusted gross income (AGI) passes $100,000 and is gone above $109,000 ($50,000 and $54,500 if married filing separately).
• Box 6: points paid on the purchase of your main home.

You enter deductible interest and points from Form 1098 on Schedule A, line 8a. Box 1 can include interest on a home equity loan or HELOC even when the money was not spent on the home, so subtract that part yourself. If you pay interest that is not on a Form 1098, such as on a loan from the person who sold you the home, enter it on line 8b with the seller's name, address, and taxpayer ID number. Points not shown on the form go on line 8c.

Two other situations change the number. In the year you sell, you deduct interest paid up to, but not including, the sale date, which appears on your settlement statement. If you and someone other than your spouse are both liable for the loan and both pay, each of you deducts only your own share, and the person without the Form 1098 attaches a statement to a paper return explaining the split.

When the deduction is smaller than the interest you paid

Three limits can cut the deductible amount below your box 1 figure. If your average mortgage balance is above $750,000, only a proportion of the interest is deductible; the dollar limits on mortgage debt explain how older and newer loans combine. If you hold a mortgage credit certificate, you subtract the credit from your interest deduction. And if you rent out a second home, only the personal-use share counts.

To see what the deduction is actually worth, follow the steps in how to calculate the mortgage tax deduction. Other loan costs are covered in mortgage costs you can deduct besides interest, and the full list of homeowner tax breaks is in tax benefits available to homeowners.