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If you have a mortgage on your home, your lender sends you Form 1098 in January showing how much mortgage interest you paid during the year. This matters because mortgage interest is one of the most commonly claimed itemized deductions.
What's on the Form
Box 1 shows the total mortgage interest you paid during the year. Box 2 shows the outstanding mortgage principal as of January 1. Box 3 shows your mortgage origination date, which matters for the interest deduction limits. Box 5 shows mortgage insurance premiums (PMI), which may be deductible depending on your income and current tax law.
The Mortgage Interest Deduction
You can deduct mortgage interest on debt up to $750,000 (for loans originated after December 16, 2017) or $1 million (for older loans). If your mortgage balance is below these thresholds — which it is for most homeowners — you can deduct all the interest shown in Box 1, as long as you itemize. Interest on a second home is also deductible subject to the same combined loan limit.
Does Itemizing Make Sense?
The standard deduction is substantial — for 2024, it's $14,600 for single filers and $29,200 for married couples filing jointly. Your mortgage interest, combined with state and local taxes (capped at $10,000), charitable contributions, and other deductions, needs to exceed the standard deduction before itemizing pays off. For many homeowners, especially in higher-cost areas with large mortgages, itemizing still makes sense.
Home Equity Debt
Interest on home equity loans or HELOCs is only deductible if the funds were used to buy, build, or substantially improve the home that secures the loan. Interest on home equity debt used for other purposes — like paying off credit cards or buying a car — is not deductible.
Points
If you paid points when you took out your mortgage, those may be deductible too — either all at once in the year you paid them (for your primary residence) or spread out over the life of the loan for a refinance. Points may appear on a separate Form 1098 or on your closing disclosure.