Things You'll Need:
- HUD-1 Settlement Statement (if you bought/sold a home) IRS Publication 936 IRS Schedule A IRS Form 1098, Mortgage Interest Statement Calculator
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Step 1
Determine if you are qualified to deduct mortgage interest taxes. To deduct your interest, you must file tax form 1040 with schedule A for itemize deductions. Also, the mortgage must be on your primary or secondary home. (Third, fourth, etc., homes' mortgage interest do not qualify.) Finally, you are qualified to deduct mortgage provided that you are legally liable for the mortgage loan. That is, you cannot deduct mortgage interest if your name is not on the loan. More information can be found on pages 2 through 5 of IRS Publication 936 (see Resources).
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Step 2
Gather forms. If you purchased or sold a home in the tax year, you will need the HUD-1 Settlement Statement. You will also need Form 1098, which should be mailed to you by your mortgage company. Form 1098 is your Mortgage Interest Statement.
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Step 3
Download forms from the IRS. Download Publication 936, Schedule A and Schedule A instructions from the IRS website (see Resources).
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Step 4
Complete worksheet on page 11 of Publication 936. You will need to know your average mortgage balance. This can be found by adding the mortgage balance from the first of the year and the mortgage balance on the last day of the year. Then divide this number by 12. You will also need the amount of mortgage interest you paid during the year, which can be found on Form 1098 that your mortgage company sent you. The rest of the worksheet can be completed using a calculator. See pages 12 through 13 of Publication 936 for more information.
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Step 5
Use the number from line 12 on the worksheet on page 11. This number is your deductible mortgage interest and can be used on Schedule A when completing your taxes.
