How to Qualify for a Mortgage Interest Tax Deduction
The Internal Revenue Service allows a tax deduction for some or all of the interest you pay on your home mortgage. In order to claim the mortgage interest tax deduction, you must file your taxes using Form 1040 and itemize your deductions using Schedule A. At the end of the year, you will receive Form 1098 from your lender that will show you how much mortgage interest you paid. The interest you pay will be much higher during the first few years because the outstanding balance of your mortgage is higher.
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Instructions
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1
Determine whether you meet the qualifications for taking the mortgage interest tax deduction. In order to qualify, your name must be on the loan, the loan must be used to purchase, build or repair your home, and you must make the payments.
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2
Determine the amount of interest you are eligible to deduct. If you are a single filer, you can deduct the interest on the first $500,000. If you file a joint return, you can deduct the interest on the first $1 million. If you took out your mortgage before Oct. 13, 1987, these limits do not apply.
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3
Determine the amount of interest you paid. In January you should receive a Form 1098 showing the amount of mortgage interest you paid in Box 1.
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Report the amount of interest you paid on Line 10 of Schedule A to claim the tax deduction for mortgage interest. This amount will decrease your taxable income.
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Tips & Warnings
When you claim the mortgage interest deduction, you can no longer claim the standard deduction, so only take the mortgage interest deduction if the total of all itemized deductions exceeds the standard deduction.
