Tax forms can help walk you through your filing step by step. To make sure you’re filing the right form, follow these steps to deduct mortgage interest on your 2024 taxes.
1. Choose A Standard Deduction Or An Itemized Deduction
If you choose the standard deduction, you won’t need to complete more forms and provide proof for all your deductions. It’s more of a “no questions asked” deduction, with a flat dollar amount that’s the same for most taxpayers. For the 2023 tax year, which will be the relevant year for April 2024 tax payments, the standard deduction is:
$14,600 for single filers
$29,200 for married couples filing jointly
$14,600 for married couples filing separately
$21,900 for heads of households
If you choose an itemized deduction, you can pick and choose from various deductions, including student loan interest, charitable contributions, medical expenses and more. To itemize your deductions, you must fill out additional forms to list each deduction. Be prepared to submit records, receipts and other documents that validate them.
Both standard and itemized deductions reduce your taxable income.
2. Get Your 1098 From Your Lender Or Mortgage Servicer
To fill out the information about the mortgage interest you paid during the tax year, you’ll need a Form 1098 from your mortgage lender or mortgage servicer (the company you make your mortgage payments to). Form 1098 details how much you paid in mortgage interest and points during the past year. It’s the proof you’ll need for your mortgage interest deduction.
Your lender or mortgage servicer will send the form at the beginning of the year your taxes are due. If you don’t receive it by mid-February, have questions we don’t cover in our 1098 guide or need help understanding your form, contact your lender.
3. Choose The Correct Tax Forms
You’ll need to itemize your deductions to claim the mortgage interest deduction. Since mortgage interest is an itemized deduction, you’ll use Schedule A (Form 1040), an itemized tax form, and the standard 1040 form.
Schedule A lists other deductions, including medical and dental expenses, taxes you paid and donations to charity. Go to the mortgage interest deduction part on line 8 and fill in the mortgage interest information from your 1098.
If you make money from the home – whether as a rental property or you use it for your business – you’ll need to fill out a different form because the way interest is deducted from your taxes depends on how you use the loan, not the loan itself.
You may need to use the following forms depending on your situation:
Schedule E:If you want to deduct the interest you pay on rental properties, use Schedule E (Form 1040) to report it. The form is used for supplemental income from rental real estate.
Schedule C: If you use part of your house as a home office or use money from your mortgage for business purposes, you may need to fill out Schedule C (Form 1040 or 1040-SR if you’re 65 or older) to report the profit or loss from a business you owned or operated.
You’ll list mortgage interest as an expense on either of these forms. Whatever mortgage interest you’re deducting or form you’re using, it’s important to know what qualifies as interest and what doesn’t. If you’re itemizing your deductions, read on.
Mortgage Interest Deduction Example
So, how should you decide between itemizing or taking the standard deduction? It all comes down to which one saves you more money. If taking the standard deduction saves you more money than itemized deductions, take the standard deduction. If itemizing saves more, itemize your deductions. But you can’t claim both. You must choose one or the other.
Let’s say you’re a single filer and itemize the following deductions: mortgage interest ($8,000), student loan interest ($1,400) and charitable donations ($2,000) for a total of $11,400. You should take the $14,600 standard deduction because an additional $3,200 would be deducted from your taxable income.
Now let’s say your mortgage interest is $12,000, your charitable donations were $2,000 and your student loan interest was $1,600. Your itemized deductions would total $15,600. In this case, taking the itemized deduction would make more sense because it would reduce your taxable income by $700 more than the standard deduction.
If you’re paying someone to prepare your taxes, itemizing your taxes may cost more because itemizing requires more work. You should factor in the cost of tax preparation when deciding which approach will save you the most money.
Before the TCJA, the mortgage interest deduction limit was on loans up to $1 million. Now, the loan limit is $750,000. For the 2024 tax year, married couples filing jointly, single filers and heads of households can deduct up to $750,000.Married taxpayers filing separately can deduct up to $375,000 each.
You can deduct the mortgage interest you paid during the tax year on the first $750,000 of your mortgage debt for your primary home or a second home. If you are married filing separately, the limit drops to $375,000.
Calculating your mortgage interest deduction is something you can do yourself. Divide the maximum debt limit by your remaining mortgage balance, then multiply that result by the interest paid to figure out your deduction.
If the loan is not a secured debt on your home, it is considered a personal loan, and the interest you pay usually isn't deductible. Your home mortgage must be secured by your main home or a second home. You can't deduct interest on a mortgage for a third home, a fourth home, etc.
How much interest can I write off? You can deduct the interest you paid on the first $750,000 of your mortgage during the relevant tax year. For married couples filing separately, that limit is $375,000, according to the Internal Revenue Service.
For 2024, the standard deduction amount has been increased for all filers, and the amounts are as follows. Single or Married Filing Separately—$14,600.Married Filing Jointly or Qualifying Surviving Spouse—$29,200.Head of Household—$21,900.
To take the mortgage interest deduction, you'll need to itemize. Itemizing only makes sense if your itemized deductions total more than the standard deduction.
Is mortgage insurance tax-deductible? No, private mortgage insurance isn't tax-deductible now. The mortgage insurance deduction was only available for eligible homeowners for the 2018–2021 tax years.
The loan may be a mortgage to buy your home, or a second mortgage. You can't deduct home mortgage interest unless the following conditions are met. You file Form 1040 or 1040-SR and itemize deductions on Schedule A (Form 1040). The mortgage is a secured debt on a qualified home in which you have an ownership interest.
The interest portion of your monthly mortgage payments: The portion of your payment that goes toward paying down principal is not deductible. Interest paid on a qualifying home equity loan or line of credit: If the money is being used to buy, build or substantially improve your home, it's deductible.
You cannot claim a mortgage interest deduction unless you itemize your deductions. This requires you to use Form 1040 to file your taxes, and Schedule A to report your itemized expenses.
1, 2026, a change enacted by the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. The TCJA also prohibits deducting interest from home equity debt for the same tax years. In fact, most TCJA provisions pertaining to individual taxpayers are temporary and scheduled to sunset on Dec. 31, 2025.
The current $750,000 limitation was introduced as part of the Tax Cuts and Jobs Act (TCJA) and will revert to the old limitation of $1 million after 2025. Though the deduction is often viewed as a policy that increases the incidence of homeownership, research suggests it does not accomplish this goal.
The Federal Reserve has decided to hold interest rates steady after its meeting on June 11 and 12, 2024. The federal funds target rate has remained at 5.25% to 5.5% since July 2023.
Introduction: My name is Kimberely Baumbach CPA, I am a gorgeous, bright, charming, encouraging, zealous, lively, good person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
