How to Deduct Mortgage Interest

For the purposes of a tax deduction, mortgage interest includes the interest and points on a primary residence. The term “points” refers to interest that is paid at the time the mortgage is secured to reduce monthly mortgage payments. Effective in 2008, “qualified mortgage insurance premiums” may also be tax deductible if you meet the income limitations. “Qualified mortgage insurance premiums” are provided by the Federal Housing Administration (FHA), the Department of Veterans Affairs or the Rural Housing Service beginning with insurance contracts issued after 2006. This article explains how to deduct mortgage interest using the Schedule A-Itemized Deductions form.


  1. Image titled Deduct Mortgage Interest Step 1
    Wait to receive Form 1098, Mortgage Interest Statement from your mortgage holder.
    • You should receive this form by January 31 (a copy is also sent to the Internal Revenue Service) if the amount you paid, including points and mortgage insurance premiums, was at least $600.
    • If you paid less than $600, look at your year-end mortgage statement, and look for the year-to-date amount of interest paid.
  2. Image titled Deduct Mortgage Interest Step 2
    Look at the Form 1098 to see how much deductible mortgage interest, points and mortgage insurance premiums you paid during the year.
    • Box 1 shows the mortgage interest.
    • Box 2 shows the points.
    • Box 4 shows the mortgage insurance premiums.
  3. Image titled Deduct Mortgage Interest Step 3
    Deduct mortgage interest, points and mortgage insurance premiums on Schedule A. You can access Schedule A at
    • If you received a Form 1098, write the total mortgage interest and points paid during the year on line 10. If you paid more interest than what is showing on the Form 1098, write “see attached” next to line 10, and attach a statement that explains the discrepancy.
    • If you did not receive a Form 1098 because you paid less than $600 deductible interest, write the amount you paid on line 11.
    • If you paid more points than the amount showing on the Form 1098, write the additional deduction for point on line 12.
    • If you paid mortgage insurance premiums (as shown in box 4 on Form 1098), write the amount you paid on line 13.
  4. Image titled Get Title Insurance Step 1
    If you did not receive a Form 1098 because someone (other than your spouse) paid part of the mortgage interest and/or mortgage insurance premiums on your home, write the amount you paid in interest on line 11 and the amount you paid in mortgage insurance premiums on line 13. Write “see attached” next to these lines, and attach an explanatory statement that includes the name and address of the person who received the Form 1098.


  • Usually Form 1098 only includes points that you can deduct in the year they were paid. If you paid points that are not included on Form 1098, check the IRS website to determine if they are deductible in the year they are paid or over the life of the mortgage.


  • If your adjusted gross income on line 38 of Form 1040 is more than $100,000 for a married couple filing jointly, or $50,000 for a married taxpayer filing separately, the amount of mortgage insurance premiums that you can deduct may be reduced or eliminated. Use the Qualified Mortgage Insurance Premiums Deduction Worksheet in the Schedule A instructions to determine what amount you can deduct.
  • Interest paid by January 15 of the following year may be included in box 1 of Form 1098; however, it cannot be deducted until the following year. For example if you receive a Form 1098 for 2008 and prepaid interest in January 2009 is included, the prepaid interest can only be deducted in 2009.

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Categories: Taxes and Fees