What Can You Write Off for Taxes With a Mortgage?

A mortgage opens the door to many itemized deductions.

A mortgage opens the door to many itemized deductions.

Buying a home and taking out a mortgage is the gateway to a large number of tax deductions. For many people, the mortgage interest they pay when they buy a house is what tips them from claiming the standard deduction to itemizing deductions. The mortgage interest deduction gets even more valuable if you take out a second mortgage or if you end up paying the Alternative Minimum Tax.

Mortgage Interest

You can write off the interest you pay on up to $1,000,000 of mortgage debt on your home or second home, as long as you took out the mortgage to buy the property or to improve it. Your lender will generally send you Form 1098 each year, which tells you the amount of mortgage interest you paid.

Home Equity Mortgage Interest

If you take additional money out of your house through a second mortgage, a home equity line of credit or a cash-out refinance, you may also be able to write off that interest. The IRS lets you combine an improvement loan with your purchase mortgage, up to the $1,000,000 limit. If you took out mortgage debt for reasons not directly related to your house, you can write off the interest on the first $100,000 of that "home equity debt."


You can write off some of the points that you pay on your mortgage. Generally speaking, you can only deduct discount points that you pay to reduce your interest rate, and you must have paid them in cash. The IRS lets you claim the points that you pay on a new mortgage in the year you pay them; the IRS lets you claim points that you pay on a refinance over the life of the loan. Depending on how the points get reported to you, you claim them on line 10 or line 12 of your Schedule A.

Mortgage Interest and the AMT

The Alternative Minimum Tax is a special tax that ensnares some middle- and upper-income taxpayers. It has a high standard deduction and two tax rates, but eliminates most itemized deductions. Luckily for mortgaged homeowners, though, one of the only common deductions that it allows is the write-off for home mortgage interest.

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