Quick Takeaways

  • The value of the mortgage interest deduction depends on the amount of your mortgage, your interest rate, how far along you are in paying off your mortgage, and your tax bracket
  • The deduction can help homeowners reduce their taxes and thus make owning a home more affordable
  • You must itemize your deductions on your tax return in order to claim it

Mortgage Interest Deductions Provisions From the 2017 Federal Tax Legislation

Check out the Tax Cuts and Jobs Act - What it Means for Homeowners and Real Estate Professionals page for information on the major provisions affecting current and prospective homeowners, commercial real estate, and real estate professionals.

What Are the Limits on Mortgage Tax Interest Deductions?

  • The Tax Cuts and Jobs Act reduced the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/15/2017. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.
  • Homeowners may refinance mortgage debts existing on 12/15/2017 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
  • The Act repealed the deduction for interest paid on home equity debt through 12/31/2025. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
  • Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.

See References for more information.