Interest paid is deductible in many cases if the taxpayer was legally liable for the debt. Refer to the table below.
Where to Deduct Interest Expenses Paid
| Form of Debt | Deduct Interest On |
| Investment Debt | Form 4952 -> Schedule A |
| Investment Debt - Royalties | Schedule E |
| Qualified Home Mortgage | Schedule A |
| Business Property | Schedule C, E or F |
| Rental Property | Schedule E |
| Student Loan Interest | Form 1040 Schedule 1 |
| Personal Debt Interest | Not deductible |
For tax years beginning in 2018 and through 2025, the deductible amount of home mortgage interest paid varies depending on the date of the mortgage, the amount of the mortgage, and how the taxpayer uses the proceeds. A qualified home is the taxpayer's main home or second home.
Qualified Home Mortgage Interest
For tax years beginning in 2018 and through 2025, the deductible amount of home mortgage interest paid varies depending on the date of the mortgage, the amount of the mortgage, and how the taxpayer uses the proceeds. A qualified home is the taxpayer's main home or second home.
- Mortgages taken out on or before October 13, 1987 - There are no limits. Interest is fully deductible regardless of how the proceeds of the loan are used.
- Mortgages acquired after October 13, 1987 and before December 15, 2017 - The combined acquisition debt on the taxpayer's main and second home is limited to $1,000,000 ($500,000 for MFS filing status). In order to deduct interest paid, the proceeds must have been used to buy, build or substantially improve the taxpayer's main or second home.
- Mortgages acquired after December 15, 2017 - The combined acquisition debt on the taxpayer's main and second home is limited to $750,000 ($375,000 for MFS filing status). In order to deduct interest paid, the proceeds must have been used to buy, build or substantially improve the taxpayer's main or second home.
Home equity debt acquired after December 15, 2017 - The deduction for home equity interest is suspended unless the proceeds are used to buy, build, or improve the home that secures the loan.
A taxpayer can deduct home mortgage interest from a loan that was used to buy, build, or substantially improve their home. Many taxpayers receive Form 1098 reporting the interest they have paid to their mortgage company during the tax year, but some taxpayers may pay mortgage interest to an individual and therefore will not receive Form 1098. To access the Schedule A Interest Menu, from the federal section of the return, select:
- Deductions
- Itemized Deductions
- Mortgage Interest and Expenses
- Select Home Mortgage Loan(s) used to Buy/Build/Improve Home - Answer the question and select Continue
Mortgage Interest Reported on Form 1098
- Select Add Interest & Points Paid - Enter lender information and the interest or points paid during the tax year, then Continue
Mortgage Interest Not Reported on Form 1098
- Select Mortgage Interest Not Reported on 1098 - Fill in the information of the individual you paid mortgage interest to during the tax year, then Continue
Points Not Reported on Form 1098
Points are shown on the taxpayer's settlement statement. Points that were paid only to borrow money are generally deductible over the life of the loan. See Pub. 936 to figure the amount you can deduct. Points paid for other purposes, such as for a lender's services, aren't deductible.
- Select Points Not Reported on 1098 - Enter the Total amortizable points deductible this year and/or Other points NOT reported on From 1098, then Continue
Private Mortgage Insurance (PMI) Deduction
- Select Private Mortgage Insurance (PMI) Deduction - Enter the amount of qualified mortgage insurance premiums on policies issued after 2006 that was paid during 2021. Generally, this amount is listed in Box 5 of Form 1098.
NOTE: This is a guide on entering Mortgage Interest into the TaxSlayer Pro program. This is not intended as tax advice.
Additional Information