You can't deduct home mortgage interest unless the following conditions are met. Search tax forms and instructions.The optional method allows you to deduct the mortgage interest and state and local real property taxes reported on Form 1098, Mortgage Interest Statement. A recorded copy of the mortgage or deed of trust document for which you are requesting an assignment. Match the PIN on the tax bill to the PIN on your deed. All third-party payoff requests require prior authorization. Using the adjacent form you can select from two options.