Can I deduct mortgage interest?

October 17, 2019 by Chris Rubino, EA
Mortgage sign and keys

Often when discussing income taxes a simple question is not so simple (for reasons no one really seems to understand, every time Congress tries to simplify the tax code it gets anything but simple), so let’s try to break this down. The term “mortgage interest” means, of course, interest that is or was paid on a mortgage loan, but that has little meaning by itself. In order to answer the question “Can I deduct mortgage interest?” we need to know what was mortgaged and how the money that was borrowed was used. And further complicating things, the tax code changed effective December 16, 2017, for mortgage loans originating after that date, so we have different rules for taking a deduction before that date and after that date.

First off, we need to know what was mortgaged. Our discussion here is going to be limited to home mortgage interest. So be aware that the answers may differ if you are talking mortgage interest on a business building, including rentals, or other property you may mortgage. The home mortgage interest deduction is only allowed on mortgage interest on your primary residence, plus one other home. If you are lucky enough to own a third home, you get to choose which of your other home's interest to claim, so it would be the mortgage interest on your primary residence plus whichever of your other homes you choose.

Next, we need to know how the money that was borrowed using the home as collateral (a mortgage loan) was used. Loan proceeds used to buy, build, or substantially improve your home are known as acquisition debt. For acquisition debt, if the loan(s) was originated prior to December 16, 2017, then your interest deduction will be limited to the interest on up to $1,000,000 ($500,000 if filing Married Filing Separate [MFS]) of underlying debt. If you refinanced an existing loan on or after that date, then the deduction will be limited to the amount of acquisition debt immediately before the refinance, or $1,000,000 ($500,000 MFS), whichever is the lesser, but the limit will not be less than $750,000 ($375,000 MFS).

If your loan originated after December 15, 2017 (there is an exception for binding contracts entered into prior to that date with a move-in date of the home by April 1, 2018), then your deduction will be limited to the interest on acquisition debt not in excess of $750,000 ($375,000 MFS). Regardless of when the loans originated, if you are deducting the interest on more than one loan, all the loans must be combined to determine if you exceed the limits.

If you have a home mortgage loan and did not use the money to either buy, build, or substantially improve the home but used the money instead for something else, then the interest on that debt is not deductible in tax years 2018 through 2025. Mortgage loan proceeds not used for acquisition are known in the tax world as equity debt, but the label has nothing to do with whether the bank labeled the loan a home equity loan; the important thing is how the money was used. Again, at the current time, only interest on acquisition debt is deductible.

So, what does this all boil down to − can you deduct mortgage interest? In regard to the personal home mortgage interest deduction on the Schedule A, the answer is yes, but only if:


  • The mortgage interest was paid on mortgages secured by your primary residence, and one other home or vacation property.
  • You are deducting the interest on money that was used to buy, build, or substantially improve one of these two properties.
  • The total of the acquisition debt on these two properties combined was less than the applicable limits. If more than the limits, then only some of the mortgage interest you paid will be deductible.



Chris Rubino, EA
Tax Content Developer


Chris’ current job title at TaxAudit is Tax Content Developer. He is an Enrolled Agent, and at present spends most of his time in the Education and Research Department, writing texts for the Education team and researching tax questions that arise during audits. During his time at TaxAudit he has been in a number of roles, including Return Reviewer and Audit Representative. He brought a varied financial background to TaxAudit, including income tax preparation and financial planning advisement. 


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