How To Deduct Your Mortgage Interest

If you’re still a little new to this having-a-mortgage thing, you may be wondering where yours factors in this tax season.  We have some good news for you—if you own a home, there’s a good chance you qualify for a tax deduction on the interest you pay. How do you qualify? First, let’s talk about what qualifies you for tax benefits. Standard houses and condos qualify, of course, but so do mobile homes, trailers, and boats. All you need, essentially, are cooking, sleeping, and bathroom facilities. Even second homes qualify for deductions—but there are some catches. Only one second home counts, and you must occupy the property for at least 14 days a year.  If your second house is an investment property, then you must use it yourself for 10% of the number of days you rented it out, otherwise you risk using the deduction. How much can you deduct? That depends largely on how long you’ve been paying your mortgage. Because lenders tend to front load interest payment (to the point where your first payments are almost entirely interest), you will have more to deduct if you’re a new homeowner, compared to someone who’s twenty years into their mortgage. Aside from that, your deduction will also be limited if your mortgages total more than $1 million (or $500k if you’re married and file separately). An added bonus? If your household makes $100k or less, you can deduct 100% of your mortgage insurance premium.