Who Can Claim the Mortgage Interest Deduction on Form 1098?

You can claim the mortgage interest deduction reported on Form 1098 if you have an ownership interest in the home, you are personally liable on the mortgage, you actually paid the interest, and you itemize deductions on Schedule A instead of taking the standard deduction.¹ Meeting three of those four isn’t enough. All of them have to line up.

The Two Requirements That Must Overlap

Two conditions have to exist at the same time. You need an ownership interest in the property, and you must be personally liable on the debt.¹ Your name on the deed satisfies ownership. Your name on the mortgage note as a borrower satisfies liability. Both, not either.

Form 1098 by itself doesn’t establish eligibility. The lender issues the form to whoever is on the loan and paid at least $600 in interest during the year.² Receiving a 1098 is evidence you paid interest, not proof the deduction belongs to you.

Paying the Mortgage Isn’t the Same as Being Eligible

This is where claims fall apart. If you send your parent’s mortgage payment every month but your name is on neither the deed nor the loan, you cannot take the deduction. The IRS doesn’t care who writes the check. It cares who owns the home and who owes the bank.³

The mirror problem is just as common. Someone whose name is on the loan and the deed but who didn’t actually pay the interest during the year cannot deduct interest paid by someone else. Ownership and liability let you claim the interest you personally paid. They don’t let you claim payments made from another person’s pocket.

Co-Owners Who Share Ownership and the Loan

When two people co-own a home and both are on the mortgage, each can deduct the share of interest they actually paid. Co-signers who share both ownership and borrower status can split the deduction based on what each person contributed.³

Lenders usually send a single Form 1098 to one borrower even when two people are on the loan. That doesn’t collapse the deduction onto that one person. The co-owner who received the 1098 reports their portion of the interest on Schedule A, line 8a. The co-owner who did not receive it reports their portion on line 8b as mortgage interest not reported on Form 1098, and lists the name and address of the co-owner who did receive the form. On a paper return, attach a statement showing how the interest was divided.⁴ Both parties should keep records of the split.

Eligibility When You Don’t Receive a Form 1098

Eligibility survives without the form. You may not receive a 1098 if your lender collected less than $600 in interest from you during the year, or if you have a private or seller-financed mortgage. Report the interest on Schedule A, line 8b, and include the lender’s name, address, and taxpayer identification number on the dotted lines next to that line. Failing to provide the lender’s TIN can result in a $50 penalty.⁵

You Have to Itemize

None of this eligibility matters if you take the standard deduction. The mortgage interest deduction only works if you itemize on Schedule A.¹ For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.⁶

Itemizing pays off only when your total Schedule A deductions exceed the standard amount. Mortgage interest is usually the biggest line on Schedule A, but state and local taxes (capped at $40,400 for most filers in 2026) and charitable contributions add to the total. A married couple with a modest mortgage may find that their interest alone doesn’t clear $32,200. Run the numbers both ways before you decide you’re eligible for a benefit that would exceed the alternative.

When the Interest on Your 1098 Isn’t Fully Deductible

Being eligible to claim the deduction doesn’t mean every dollar reported on your 1098 counts. Three situations commonly reduce what an otherwise-eligible borrower can claim.

Home Equity Loans Used for Other Purposes

Interest on a home equity loan or line of credit is deductible only if you used the money to buy, build, or substantially improve the home that secures the loan. If you used a HELOC to pay off credit cards, take a vacation, or cover tuition, that interest isn’t deductible.⁷ The lender still reports the interest on Form 1098 no matter how you spent the money, which is why this catches people off guard.

Debt Above the Cap

For 2026, the deduction applies to the first $750,000 of acquisition debt, or $375,000 if married filing separately.⁸ Mortgages taken out before December 16, 2017, still fall under the older $1 million limit ($500,000 for married filing separately).¹ When your balance is above the applicable cap, you deduct only the proportion of interest that corresponds to the qualifying amount.

Third Homes

You can deduct mortgage interest on your main home and one second home. If you own three or more homes, you pick which one counts as the second home for that year. Interest on any additional property doesn’t qualify regardless of how you use it. A qualifying home has sleeping, cooking, and bathroom facilities, which covers condos, mobile homes, houseboats, and some recreational vehicles.⁹

What It Costs to Claim Interest You Shouldn’t

Deducting interest you weren’t entitled to, whether because you didn’t meet the ownership and liability requirements or because the underlying debt didn’t qualify, does more than lose you the deduction. The IRS charges an accuracy-related penalty of 20% on the underpaid tax when the error reflects negligence or a substantial understatement.¹⁰ Interest also accrues daily on the unpaid balance. For the first quarter of 2026, the IRS underpayment interest rate is 7%.¹¹

The most common errors involve deducting HELOC interest on debt that wasn’t used for home improvements and claiming the full deduction on a mortgage that exceeds the debt cap. Both are easy to get wrong in good faith. The penalty applies regardless of intent when the understatement is large enough, so if your situation involves a shared loan, mixed-use borrowing, or a balance near the cap, working through the Publication 936 worksheet before filing is worth the time.

1
Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction
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Internal Revenue Service. About Form 1098, Mortgage Interest Statement
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Office of the Law Revision Counsel. 26 USC 163 – Interest
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Internal Revenue Service. Other Deduction Questions 2
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Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction – Section: How To Report
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Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One Big Beautiful Bill
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Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction – Section: Home Equity Loan Interest
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U.S. House Committee on Ways and Means. The One Big Beautiful Bill Section by Section – Section: Sec. 110008
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Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction – Section: Qualified Home
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Internal Revenue Service. Accuracy-Related Penalty
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Internal Revenue Service. Quarterly Interest Rates