Deductible Home Mortgage Interest
A home mortgage interest deduction allows taxpayers who own their homes to reduce their taxable income by the interest paid on the loan which is secured by their principal residence. The standard justification for the deduction is that it encourages home ownership.
The National Association of Realtors strongly opposes eliminating the mortgage interest deduction, claiming, “Housing is the engine that drives the economy, and to even mention reducing the tax benefits of homeownership could endanger property values. Home prices, particularly in high cost areas, could decline 15% if recommendations to convert the mortgage interest deduction to a tax credit are implemented.”
How to Deduct Home Mortgage Interest
Your lender should send you Form 1098 (Mortgage Interest Statement) by end of January with the interest amount you paid, including points and mortgage insurance premiums.
On IRS Form 1040 Schedule A (Itemized Deductions), “Interest You Paid” section:
Line 10, write the total mortgage interest and points paid during the year.
Line 11, if you did not receive Form 1098, write the interest paid.
Line 12, write the additional points not reported on Form 1098.
Line 13, if you paid mortgage insurance premiums.
