How to claim the mortgage interest deduction on your taxes in 2024

Paying interest is no fun, but the interest on your mortgage could help you lower your taxes.

The mortgage interest deduction (MID) allows borrowers to write off a portion of the interest on their home loan. That lowers your taxable income and can move you into a lower tax bracket, which can save you thousands at tax time.

The MID was introduced in 1913, the same year as federal income taxes. With interest rates hitting a 23-year-high in 2023, this deduction could be particularly beneficial this tax season.

Here's what you need to know about the mortgage interest deduction, including who is eligible, how much you can claim and how to include it on your tax return.

The mortgage interest deduction allows homeowners to deduct a portion of the interest on their home loan from their taxable income. You'll have to itemize your return and the loan must be a secured debt with your property as collateral.

In addition to private loans, the MID can be claimed using government-backed mortgages like USDA, VA and FHA loans.

If you want to claim the deduction for a mortgage refinance, home equity loan or home equity line of credit, the funds must have been used toward renovations or other improvements.

You can also deduct mortgage points, any penalties for paying your mortgage off early and some late payment charges.

You can deduct the interest you paid on the first $750,000 of your mortgage during the relevant tax year. For married couples filing separately, that limit is $375,000, according to the Internal Revenue Service.

If you took out your mortgage between Oct. 13, 1987, and Dec. 16, 2017, the limit is $1 million or $500,000 for couples filing separately. There is no cap for mortgages taken out before Oct. 13, 1987.

The maximum deduction includes the total amount of loans on your primary and secondary residences.

The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction, from $6,500 to $12,000 for individual filers, from $13,000 to $24,000 for joint filers and from $9,550 to $18,000 for heads of household.

As a result, the number of taxpayers who choose to itemize their returns and claim the MID has declined precipitously.

Add up the interest you paid on your mortgage last year, along with any other deductions you plan to take. If the total is less than the standard deduction, it's probably not worth the trouble of itemizing.

If it is worth it, you can use TurboTax Deluxe to deduct mortgage interest and property taxes, claim expenses related to selling your home and take advantage of other tax breaks for homeowners. There are also tiers with tax pros who can give unlimited advice or even do your return for you, from start to finish.

You'll claim the mortgage interest deduction with TaxSlayer's free tier. You can, however, with the software's paid options. The self-employed tier is great for freelancers and gig workers and it includes support from a tax expert with self-employment expertise. It also comes with audit defense and reminders to pay quarterly taxes.

If you paid more than $600 in interest last year, your mortgage provider should send you a completed Form 1098 to use to fill out the Itemized Deduction List on Form 1040-Schedule A.

In some cases, interest paid on timeshares, rentals, home offices and other properties may qualify for a deduction, as well, but they may require additional forms. You can consult IRS Publication 936 for more information.

If you want to save more money next year, refinancing your mortgage at a lower rate will reduce the amount of interest you'll have to pay.

Some qualified mortgage borrowers who have a Freddie Mac mortgage or a Fannie Mae mortgage can refinance with Freddie Mac's ReFi Possible and Fannie Mae's ReFi Now. They both guarantee at least a 0.50% drop in your mortgage rate and a decrease in your monthly payments.

PNC Bank offers these refinancing products, according to the bank. PNC is available in all 50 states and provides both online and in-person service.

Rocket Mortgage also offers these two products. You can get pre-qualified in minutes online, and you can use its app to manage your payments.

The mortgage interest deduction can make a dent in a homeowner's tax bill, but it's important to understand if you qualify for it and if claiming it would net you more than just taking the standard deduction.

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