If you itemize your deductions, the IRS will allow you to write off your mortgage interest. The principal (the borrowed funds you are repaying) cannot be deducted.
Form 1098, the Mortgage Interest Statement, is typically where mortgage interest is reported. We’ll ask you a series of follow-up questions after you enter your 1098 in TurboTax to make sure you qualify for the deduction.
You can only deduct interest from the amount of your loan that was used to purchase, construct, or improve the home that it is secured by for tax years 2018 through 2025.
Even if the transaction didn’t happen this year, if you’ve ever used a portion of this loan to pay for items other than this house, you cannot deduct the interest from that amount of the loan.
Example: Jo borrowed a $40,000 home equity line of credit against their property on Tuberose Street. They put $15,000 down on a second home on Snowdrop Lane and used $25,000 to renovate the kitchen and bathrooms in their Tuberose Street residence. Jo is only permitted to deduct the interest on the $25,000 she spent on home improvements for their Tuberose Street property.
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FAQ
Why is TurboTax not deducting my mortgage interest?
If you don’t itemize your deductions, you can’t claim a mortgage interest deduction. You must do this by filing your taxes using Form 1040 and itemizing your expenses on Schedule A.
How do I enter mortgage interest deduction in TurboTax?
- To open your return, choose Deductions & Credits on the Tax Home page.
- Choose Mortgage Interest and Refinancing (Form 1098) under Your Home.
- If asked if you made any home loan payments in 2021, say yes.
- Type in the name of your mortgage lender.
Can you no longer deduct mortgage interest?
In order to deduct interest on a home mortgage, the following requirements must be met. You itemize deductions on Schedule A (Form 1040) when you file Form 1040 or Form 1040-SR. Your ownership interest in the qualified home is secured by the mortgage as a secured debt. Secured Debt and Qualified Home are explained later.
Is mortgage interest tax deductible in 2022?
The ceiling for the mortgage interest deduction was $1 million prior to the Tax Cuts and Jobs Act. However, the cap was reduced to $750,000 in 2022, so this tax year married couples filing jointly and single filers can both deduct interest up to $750,000.