How much mortgage interest can you deduct on your taxes?

Mortgage interest is probably one of the biggest deductions you can take to lower your taxable income.

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Everyone wants to save on taxes, and one of the best ways is to maximize your eligible deductions.

The mortgage interest deduction was a topic for consumers, but the past few years have changed that. Some homeowners may prefer not to take that deduction.

Can you calculate how much to deduct by using a tax preparation program like E-file here.

If you want to do it, read below to find out how it works – and if it’s right for you.

How mortgage interest is deductible on federal taxes

When you file taxes, you can take the standard deduction or the itemized deduction. In 2022, the standard deduction is $25,900 for married couples filing jointly and $12,950 for individuals. The standard deduction is $19,400 for those filing as head of household.

The mortgage interest deduction is only available to those who itemize their deductions. If you take the standard deduction, you won’t be able to deduct your mortgage interest. And because the standard deduction is so high, many homeowners prefer not to itemize their deductions.

In general, you must itemize your deductions if the total is more than the standard deduction. You can do the math yourself or hire an accountant if you want more help.

You can also deduct the interest on a home equity loan or line of credit, if the home is secured as collateral. If the rest of the property is listed as collateral, you may not be able to deduct the interest.

Depending on the size of your mortgage, the mortgage interest deduction may be one of the largest deductions you can take and can significantly reduce your taxable income.

Tax preparation software can easily help you figure out how much to withhold. Do your taxes right and verify your best return with TurboTax here.

How to deduct mortgage interest on state tax returns

If your state charges income tax, you may be able to deduct your mortgage interest on your tax return. However, how much you can deduct and any other limits depend on your state’s laws.

If you want to deduct the interest, you can use the figures from the 1098 form sent by your mortgage company. If you don’t get a 1098, it probably means you paid less than $600 in interest. However, you still have to deduct the mortgage interest. You must manually calculate the amount of interest to be paid in full.

Some states may have a limit on how many properties you can deduct the mortgage interest on, while other states will allow you to deduct the interest on all of your homes.

How to qualify for the mortgage interest deduction

Only homeowners with $750,000 or less in mortgage debt can deduct their mortgage interest. If you’re married filing separately, you can only deduct mortgage interest if the mortgage debt is $375,000 or less.

The previous limit was $1 million, but that was changed after the 2017 Tax Cuts and Jobs Act was passed.

Second home mortgage interest deduction

If there is two houses, you can still deduct mortgage interest on your federal taxes on a second home. To qualify, the property must be listed as collateral on the loan. You can only deduct the interest on a single home other than your primary home.

However, the rules are different if the second home is an apartment. If that’s the case, you can only take the deduction if you live in the property for 14 days or for 10% of the rental period. If you don’t live in it, then it’s considered a rental property so you can’t take the mortgage interest deduction.

Still have more questions about tax deductions? The experts at H&R Block can help you.

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