Do you think your mortgage is just a monthly expense? It might be your biggest tax break. The home mortgage interest deduction allows homeowners to reduce their taxable income, but only if they follow IRS guidelines. According to Congress.gov, higher-income areas like California and the Northeast benefit most due to larger mortgages, higher interest payments, and greater deductions.
If you're filing a 2024 tax return in 2025, understanding how the home mortgage interest deduction works including what interest is deductible, when to itemize deductions, and which homes qualify, can lead to serious savings.
Mortgage Interest Deduction Limits for 2024
It depends on when you took out the mortgage:
- After December 15, 2017: Deduct the interest on up to $750,000 of mortgage debt ($375,000 if married filing separately).
- Between October 13, 1987 and December 15, 2017: Deduct mortgage interest on up to $1 million ($500,000 if married filing separately).
- Before October 13, 1987: No limit on deductible mortgage interest.
These limits apply to your combined total across your main and second home. Heads up:
These limits are part of the Tax Cuts and Jobs Act and are scheduled to expire after 2025, meaning the deduction rules could change again in 2026.
When Does Itemizing Make Sense?
You can only claim the mortgage interest deduction if you itemize deductions on your tax return using Schedule A. That means your total deductible expenses, including mortgage interest payments, property taxes, and charitable donations, must exceed the standard deduction:
- Single: $14,600 (2024) | $15,000 (2025)
- Married Filing Jointly: $29,200 (2024) | $30,000 (2025)
So let’s say you paid $12,000 in mortgage interest last year and you're single, don’t bother itemizing. You’d save more just taking the standard deduction.
But if you had $16,000 in interest, plus deductions for state taxes or charitable donations? That’s when itemizing starts to offer a bigger benefit.
What Mortgage Costs Are Deductible and What Aren’t?
Here’s what you can write off:
- Primary home interest – standard mortgage interest is good to go.
- Second home interest – as long as you’re not renting it full-time (more on that below).
- HELOCs or home equity loans – but only if the money went toward improving the home. Remodeling the kitchen? Deductible. Paying off credit cards? Not deductible.
- Construction loans – interest can be deducted up to 24 months while the house is being built.
- Fees and penalties:
- Late payment fees (if interest-based)
- Prepayment penalties
- Points (may be fully deductible upfront or over the life of the loan)
What mortgage-related costs are not deductible?
These ones are not deductible, don’t let anyone tell you otherwise:
- Principal payments – you’re repaying the loan, not interest.
- Mortgage insurance premiums – these were deductible for a while, but not anymore after 2021.
- Homeowners insurance
- Down payments
- Closing costs (unless you paid points, which is a separate thing)
What Homes and Loans Qualify for the Mortgage Interest Deduction?
Can mortgage interest be deducted for second homes?
Yes, you can deduct interest on a mortgage for a second home, but only for one second home each tax year. If you rent out the second home, you must also use it for more than 14 days or 10% of the rental days (whichever is longer) to qualify as a second home under IRS rules. Otherwise, it's considered a rental property.
If it doesn’t meet that, the IRS treats it like a rental property, not a second home—different rules apply.
What about homes under construction or recently sold?
- Under construction? You can deduct interest for up to 24 months, as long as it becomes your qualified home when it's finished.
- Sold your home? You can deduct interest paid up until the day before closing. After that, it's no longer your mortgage.
How to Claim the Mortgage Interest Deduction on Your 2025 Tax Return?
Do I need special forms to claim this deduction?
Yep. Here’s what you need:
- Schedule A (Form 1040) – this is where you itemize.
- Form 1098 – your lender will send this to you in January or February. It lists how much interest you paid.
Don’t guess—use the number from your 1098 to avoid red flags with the IRS.
How do I deduct mortgage points?
Points paid on a mortgage to buy your home are usually fully deductible in the year paid if IRS requirements are met. Otherwise, you'll deduct a portion each year over the loan term. Check your HUD-1 or closing disclosure to see if you paid points.
Here’s how it works:
- If you bought or built your main home and the points meet IRS rules, you can usually deduct the full amount in the year you paid them.
- If not, you’ll need to amortize them over the life of the loan. That’s 1/30th per year on a 30-year mortgage.
Check your closing disclosure or HUD-1 statement—points will be clearly listed there.
How Can Taxfyle Help You Claim the Maximum Mortgage Interest Deduction?
Taxfyle pairs you with licensed tax professionals who handle complex deductions like mortgage interest, especially helpful if you’re dealing with:
- Multiple properties (primary and second homes)
- HELOCs or construction loans used for home improvements
- Mortgage points and prepayment penalties
- Deciding between itemizing vs. standard deduction
Your Taxfyle expert will review your Form 1098, calculate exactly how much interest qualifies under 2024 IRS limits, and file Schedule A correctly—so you don’t miss a dollar you’re legally allowed to deduct.
Key Takeaways
- You can deduct mortgage interest on up to $750,000 in mortgage debt ($375,000 if married filing separately) for loans taken after Dec. 15, 2017.
- Older loans may qualify for a $1 million mortgage interest tax deduction limit.
- The deduction applies to your main home and one qualifying second home.
- You must itemize deductions on your 2024 tax return to deduct your home mortgage interest.
- Mortgage interest is only deductible if the loan is secured by your home and used to buy, build, or improve it.
How can Taxfyle help?
Finding an accountant to manage your bookkeeping and file taxes is a big decision. Luckily, you don't have to handle the search on your own.
At Taxfyle, we connect small businesses with licensed, experienced CPAs or EAs in the US. We handle the hard part of finding the right tax professional by matching you with a Pro who has the right experience to meet your unique needs and will manage your bookkeeping and file taxes for you.
