The information in this article is up to date for tax year 2025 (returns filed in 2026).
The mortgage interest deduction allows homeowners to reduce their taxable income by the amount of interest paid on a qualified residence loan. The One Big Beautiful Bill Act revised the Mortgage Interest Deduction, making the Tax Cuts and Jobs Act limits permanent beginning January 1, 2025. In this article, we will cover the limits of the deduction for different filing statuses, provide examples of how it works, discuss reporting requirements, and clarify rules for shared ownership or helping others with mortgage payments.
Can I deduct mortgage interest on my taxes?
According to the IRS, you can deduct the interest on a home loan that is used to purchase, construct, or make substantial improvements to a primary or secondary residence. The loan must also be secured by the home and not exceed the value of the home.
How much is the Mortgage Interest Deduction?
Single filers and those married filing jointly can deduct the interest on up to $750,000 of qualified residential loans secured on or after December 15, 2017. If you’re married filing separately, you can deduct interest on up to $375,000 of qualified debt.
Starting in 2026 (the return you’ll file in 2027), your mortgage insurance premiums can be deducted as part of your mortgage interest.
Note that, if your mortgage was taken out before Dec. 15, 2017, you can deduct the mortgage interest on up to $1 million of qualified residential loans ($500,000 if married filing separately). This cap was reduced to $750,000 in 2017 under the Tax Cuts and Jobs Act, and that new, lower limit was made permanent by the One Big Beautiful Bill starting in tax year 2025.
Example: How the Mortgage Interest Deduction works
Let’s say you and your spouse took out a $250,000 loan to purchase a $300,000 house. You used the house to secure the loan. The same year, you take out a $100,000 loan to fix up your summer cabin, valued at $150,000. You used the cabin to secure that loan.
$250,000 + $100,000 = $350,000 total in loans
The combined total for your loans is less than the $750,000 limit. Because you’re using the funds to purchase and make improvements to your primary and secondary homes, you can deduct the interest you pay for these loans from your taxable income.
What form do I need to report my mortgage interest?
You’ll use the IRS Form 1098 from your lender (or mortgage servicer) to report the amount of interest you paid during the year. Servicers are required to issue this form to you if you paid $600 or more in mortgage interest during the tax year. The form summarizes the total amount of interest you paid on your mortgage and any points you might have paid, which can also be deductible.
You can expect to receive it in January, giving you all the necessary information when preparing your taxes. If you haven’t received your Form 1098 by mid-February, it’s a good idea to contact your lender to ensure they have your correct address and to request a replacement if necessary.
Can I deduct the interest on my home equity loan?
Whether or not you can deduct the interest on your home equity loan depends on how you use the money.
Like a mortgage, a home equity loan is considered by the IRS to be a qualified residence loan. So, if use your home equity loan to make improvements to your residence, the interest could be deductible. But if you use it to cover personal expenses, like credit card debt or student loans, you can’t deduct the interest.
Can I deduct mortgage interest if I share a property with others?
When multiple people buy a home together, it is considered shared ownership. This means each owner can deduct the amount of interest they pay if they itemize their deductions. Lenders typically send out a mortgage interest statement at the end of the tax year to indicate the total interest paid on the mortgage.
Taxpayers are responsible for reporting the correct amount of interest they paid, regardless of whose name or Social Security number is listed on the mortgage interest statement received.
Can I deduct the interest for someone else’s mortgage that I pay?
If you help make mortgage payments for a child or friend while they are unemployed, you cannot claim the mortgage interest deduction for someone else’s debt unless you are a legal owner of the property.
