Can You Get Tax Deductions on Mortgage Payments?

You can claim tax deductions on mortgage payments by itemizing four specific pieces of what you pay: mortgage interest, real estate property taxes, mortgage insurance premiums, and points paid at closing. The rest of your payment — principal, homeowners insurance, utilities, HOA dues — produces no federal tax benefit. And itemizing only helps if those deductions, added to your other itemized expenses, exceed your standard deduction: $32,200 for married couples filing jointly, $16,100 for single filers, $24,150 for heads of household, and $16,100 for married filing separately in 2026.¹

What Part of Your Mortgage Payment Is Deductible

A monthly payment usually bundles principal, interest, taxes, and insurance. Only some of those pieces reach your tax return.

Deductible on Schedule A when you itemize:

Mortgage interest on a loan secured by your primary residence or one second home
Real estate property taxes, subject to the SALT cap
Mortgage insurance premiums (PMI, FHA MIP, VA funding fees, USDA guarantee fees) starting with tax year 2026
Points paid at closing, either in full or spread over the loan term depending on the loan

Not deductible on a personal residence:

Principal repayment. That portion builds equity rather than paying an expense.²
Homeowners insurance, including fire, hazard, and flood policies.³
Utilities such as gas, electric, and water.³
HOA dues and general maintenance fees.

Your lender reports the interest you paid on Form 1098 each January.⁴ If taxes and insurance flow through an escrow account, only the actual amount your servicer sent to the taxing authority during the year counts as property tax paid, not the amount you deposited into escrow. Those figures often differ in the early years of a loan.

How Much Mortgage Interest You Can Deduct

Under 26 U.S.C. § 163(h), qualified residence interest is deductible on acquisition debt: money borrowed to buy, build, or substantially improve a qualified home that secures the loan. The home has to include sleeping quarters, a kitchen, and a bathroom to qualify.⁵

How much of your interest is deductible depends on when you took out the loan. The One Big Beautiful Bill Act, signed July 4, 2025, made the current limits permanent.⁶

Mortgages taken out after December 15, 2017: interest is deductible on up to $750,000 of combined debt across your primary and second home ($375,000 if married filing separately).²
Mortgages taken out between October 14, 1987 and December 15, 2017: the older $1,000,000 limit applies ($500,000 if married filing separately). New debt taken on after December 15, 2017 reduces the room you have under the $750,000 cap.⁵
Mortgages taken out on or before October 13, 1987: all interest is deductible with no dollar cap. This grandfathered debt does, however, reduce the room under the caps above.²

If your balance exceeds the applicable limit, you prorate. Owe $900,000 on a post-2017 mortgage and about 83% of your interest is deductible ($750,000 ÷ $900,000); the rest becomes nondeductible personal interest.

Refinancing and Cash-Out

Refinancing does not automatically drop an older loan into the lower cap. A mortgage that qualified under the $1,000,000 limit keeps that limit after a refinance, but only up to the balance you refinanced and only for the original loan’s remaining term.² If you cash out and increase your principal, the extra amount counts as acquisition debt only if you spend it on substantial improvements to the home. Cashing out to pay off credit cards makes that portion of the interest nondeductible.

Home Equity Loans and HELOCs

Interest on a home equity loan or HELOC is deductible only when you use the borrowed money to buy, build, or substantially improve the home securing the loan.⁷ Renovate the kitchen with HELOC funds and the interest is deductible under the $750,000 combined cap. Use the same HELOC to consolidate credit cards, cover tuition, or buy a car and none of the interest is deductible, even though your house secures the loan. Keep receipts and contractor invoices tying the loan proceeds to a qualifying improvement; general proof that work happened at some point is not enough in an audit. The restriction is now permanent.²

Property Taxes and the SALT Cap

Real estate property taxes on your home are deductible, but they share space with your state and local income or sales taxes under the SALT cap. For 2026, the cap is $40,400 for most filers and $20,200 for married filing separately.⁶ In a high-income-tax state, state taxes can consume most of the cap and leave little room for property taxes.

The cap shrinks for higher earners. If your modified adjusted gross income exceeds $505,000 ($252,500 married filing separately), the $40,400 cap is reduced by 30 cents for every dollar over the threshold, with a floor of $10,000 ($5,000 married filing separately).⁶ These dollar amounts rise 1% each year through 2029.

Points Paid at Closing

Points are prepaid interest, with each point equal to 1% of the loan amount. When you can deduct them depends on the loan.

Points are fully deductible in the year of closing only if all of the following are true: the loan is to buy or build your primary home, points are calculated as a percentage of the principal, paying points is standard practice in your area, the settlement statement clearly labels them as points, and you brought enough funds to closing (including any seller credits) to cover the points charged.⁸ A home improvement loan on your primary residence follows the same rule.²

Points on a refinance, a second-home purchase, or any loan that misses one of those conditions are spread over the loan term. Pay $3,600 in points on a 30-year refinance and you deduct $120 per year.

Seller-paid points are still deductible by the buyer, provided the same conditions are met, but the buyer must reduce the home’s cost basis by the same amount.² A lower basis means a larger taxable gain when you eventually sell.

Mortgage Insurance Premiums Are Deductible Again in 2026

Borrowers who put less than 20% down usually pay private mortgage insurance. Government-backed loans carry their own versions: FHA mortgage insurance premiums, VA funding fees, and USDA guarantee fees. After several years without a deduction, the One Big Beautiful Bill Act restored treatment of these premiums as deductible mortgage interest starting with the 2026 tax year.⁶

The deduction covers premiums on debt used to buy, build, or improve the home, and it phases out with income. Historically the phase-out began at $100,000 AGI for joint filers ($50,000 married filing separately), dropping the deductible amount 10% for every $1,000 above the threshold until it disappeared at $110,000 ($55,000 married filing separately).

Does Itemizing Beat the Standard Deduction?

Every deduction above requires you to itemize on Schedule A of Form 1040.⁹ If your itemized total does not exceed your standard deduction, itemizing gives you nothing. You take whichever is larger.

A quick estimate: add your mortgage interest from Form 1098, property taxes actually paid (capped by SALT), state income or sales taxes, charitable contributions, and any deductible mortgage insurance. Compare that total to your standard deduction for 2026. Clear it by a meaningful margin and itemizing helps. Fall short and the standard deduction wins, meaning your mortgage costs produce no direct federal tax benefit that year.

The math shifts against itemizing as a loan ages. Early payments are mostly interest, so the deductible share is large. Later in a 30-year loan the split tips toward principal, and homeowners in year 20 or 25 sometimes find their interest alone no longer clears the standard deduction.

Records to Keep

If you itemize, hold documentation for every deduction claimed. Keep Form 1098 from each lender, the closing settlement statement showing any points, contractor invoices or receipts for improvements funded by home equity borrowing, and property tax statements or escrow summaries showing what was actually paid to the taxing authority.² If you had to prorate interest because your balance exceeded the debt cap, keep monthly mortgage statements showing beginning and ending balances so you can rebuild the calculation. The IRS generally recommends holding tax records at least three years after filing.

A Note for the Self-Employed

If you are self-employed and use part of your home exclusively and regularly as your principal place of business, a portion of your mortgage interest and property taxes can move from Schedule A to a business expense, on top of the personal itemized deduction for the rest.¹⁰ W-2 employees cannot claim the home office deduction even when they work from home full-time. Two calculation methods exist — the regular method using square footage on Form 8829, and a simplified $5-per-square-foot method capped at 300 square feet ($1,500 maximum).¹¹

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
2
Internal Revenue Service. Publication 936 – Home Mortgage Interest Deduction
3
Internal Revenue Service. Tax Benefits for Homeowners
4
Internal Revenue Service. About Form 1098, Mortgage Interest Statement
5
Office of the Law Revision Counsel. 26 USC 163 – Interest
6
United States Congress. H.R.1 – 119th Congress – One Big Beautiful Bill Act
7
Internal Revenue Service. Real Estate Taxes, Mortgage Interest, Points, Other Property Expenses
8
Internal Revenue Service. Topic No. 504, Home Mortgage Points
9
Internal Revenue Service. About Schedule A (Form 1040), Itemized Deductions
10
Internal Revenue Service. Publication 587 – Business Use of Your Home
11
Internal Revenue Service. Simplified Option for Home Office Deduction