Deducting mortgage interest

What Is the Mortgage Interest Deduction?

If you own a home and have a mortgage, the interest you pay on that loan is usually tax-deductible. This is one of the biggest tax benefits of homeownership and can significantly reduce your taxable income.

What Qualifies?

You can deduct mortgage interest on:

• Your **primary residence** (the home you live in)
• A **second home** (vacation home, etc.)
• Home equity loans or lines of credit **used to buy, build, or substantially improve** the home

Loan Limits

There's a cap on how much mortgage debt qualifies for the deduction:

• **Mortgages taken out after December 15, 2017:** Interest on up to **$750,000** of mortgage debt is deductible
• **Mortgages taken out before December 16, 2017:** Interest on up to **$1,000,000** of mortgage debt is deductible

If your mortgage is under these limits (most are), you can deduct all the interest you paid.

Form 1098

Your mortgage lender sends you a Form 1098 each year showing the total interest you paid. This is the number you'll enter in FileJoy. Key boxes to look for:

• **Box 1:** Mortgage interest received (this is what you deduct)
• **Box 2:** Outstanding mortgage principal
• **Box 5:** Mortgage insurance premiums (may also be deductible)

How to Enter in FileJoy

1. Click **Deductions** in the left sidebar
2. Select **Mortgage interest**
3. Click **Add 1098**
4. Enter the lender's name, EIN, and the interest amount from Box 1
5. Save

FileJoy will automatically include this in your itemized deductions and compare it against the standard deduction to give you the best result.

Important Notes

• You must **itemize** to claim the mortgage interest deduction—it's not available with the standard deduction
• If your total itemized deductions are less than the standard deduction, it may not be worth itemizing just for mortgage interest
• Private mortgage insurance (PMI) premiums may also be deductible—check Box 5 of your 1098