Get Mortgage Interest Credit

Most Homeowners Get Nothing The Tax Cuts and Jobs Act (TCJA) passed in 2017 reduced the maximum mortgage principal eligible for deductible interest to $750,000 for new loans, down from $1 million. Homeowners can deduct the interest paid on up to $750,000 in mortgage debt.

The loan may be a mortgage to buy your home, or a second mortgage. You can't deduct home mortgage interest unless the following conditions are met. You file Form 1040 or 1040-SR and itemize deductions on Schedule A (Form 1040). The mortgage is a secured debt on a qualified home in which you have an ownership interest.

A mortgage interest credit, for example, allows qualified homeowners to claim a credit on their tax return that's worth a percentage of the mortgage interest they paid over the course of a given tax year.

The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and isn't deductible.

In general, you can deduct the mortgage interest you paid during the tax year on the first $750,000 of your mortgage debt for your primary home or a second home. If you are married filing separately the limit drops to $375,000.

Lender credits work the same way as points, in reverse. You pay a higher interest rate and the lender gives you money to offset your closing costs. When you receive lender credits, you pay less up front, but you pay more over time because the interest rate is higher.

Form 8396 is for holders of Qualified Mortgage Credit Certificates (MCC) issued by state or local governmental units or agencies; the certificate credit rate is shown on the certificate. To access Form 1098 and report mortgage interest paid, go to our Form 1098 - Entering in Program FAQ.

The new 2023 tax law on mortgage interest, as stated by the IRS, says that the mortgage interest deduction is applicable on the first $750,000 of your home loan. Taxpayers who are married but are filing separately are eligible to subtract $375,000 from their average mortgage balance.