The amount of mortgage interest that is tax deductible depends on several factors including when you took out the mortgage, the amount of the mortgage, and how you use the loan proceeds. Here are the key points for 2025:
- You can deduct mortgage interest on up to $750,000 of mortgage debt ($375,000 if married filing separately) for mortgages taken out after December 15, 2017.
- For mortgages taken out on or before December 15, 2017, the limit is $1 million ($500,000 if married filing separately).
- Interest on home equity loans or lines of credit is deductible only if the funds are used to buy, build, or substantially improve the home securing the loan.
- To claim the deduction, you must itemize your deductions instead of taking the standard deduction.
- The mortgage must be secured by your primary or secondary residence (which can be a house, condo, mobile home, houseboat, etc.).
- The deduction applies only to interest on loans used to buy, build, or improve the home; personal expenses financed by home equity loans are not deductible.
- The current $750,000 limit is set to revert to $1 million after 2025 unless Congress extends the Tax Cuts and Jobs Act provisions.
- If your mortgage exceeds the applicable limit, you can only deduct the interest proportional to the limit amount.
For example, if you have a $800,000 mortgage taken out after 2017, you can only deduct interest on $750,000 of that debt. If you took the mortgage before 2017, you could deduct interest on up to $1 million of debt
. In summary, the deductible mortgage interest is limited to interest paid on the first $750,000 (or $1 million for older loans) of qualified mortgage debt, provided you itemize deductions and meet IRS requirements
