Your home mortgage interest deduction may be limited. There is a limit on the amount of debt that interest can be deducted on. If you meet the other requirements and your loan is for less than $750,000, your deduction is not limited. TurboTax will calculate the amount of your deduction for you based on your 1098 entries.
The IRS lets you deduct your mortgage interest, but only if you itemize deductions. You can't deduct the principal (the borrowed money you're paying back). In addition to itemizing, these conditions must be met for mortgage interest to be deductible:
- The loan is secured, which means the lender has some kind of guarantee of payment, usually in the form of property. If a borrower defaults on payments, the lender can seize the property that’s securing the loan. If you’re buying or refinancing a home, especially if it’s your first home, the loan is usually secured by the home you’re buying or refinancing.
- The home with the secured loan must have sleeping, cooking, and toilet facilities.
- The debt can’t exceed $750,000 (or $1,000,000 if the loan was taken before December 16, 2017) in order to get the full deduction.
- You or someone on your tax return must have signed or co-signed the loan.
- If you rented out the home, you must have used the home more than 14 days during the tax year or 10% of the number of days you rented it out, whichever is greater.
Here is a link to a similar question and answer.
