Mortgage Interest Deduction in 2026: Limits, Eligibility, and How to Claim

The mortgage interest deduction is a significant tax benefit for many homeowners, allowing them to reduce their taxable income by deducting the interest paid on their home loans. However, the rules surrounding this deduction can be complex, and limitations apply. This article provides a comprehensive overview of the mortgage interest deduction as of 2026, covering eligibility requirements, deduction limits, and how to claim the benefit.

Understanding the Mortgage Interest Deduction

The mortgage interest deduction allows homeowners who itemize their deductions to subtract the interest they pay on their mortgage from their gross income, potentially lowering their tax liability. To qualify, the mortgage must be secured by the taxpayer’s home and the loan proceeds must be used to buy, build, or substantially improve the property.

Eligibility Requirements

To be eligible for the mortgage interest deduction, you must meet the following criteria:

• Itemize Deductions: You must choose to itemize deductions on Schedule A of Form 1040, rather than taking the standard deduction.
• Secured Debt: The mortgage must be secured by your home.
• Loan Purpose: The loan proceeds must have been used to buy, build, or substantially improve your main home or a second home.
• Filing Status: Married couples filing separately may face different limitations (see below).

Deduction Limits in 2026

The amount of mortgage interest you can deduct is subject to certain limitations, which depend on when the mortgage was originated:

• Loans Originated After December 15, 2017: You can deduct interest on the first $750,000 of debt ($375,000 if married filing separately). IRS Publication 936
• Loans Originated Before December 16, 2017: For mortgages taken out before this date, you may be able to deduct interest on debt up to $1 million ($500,000 if married filing separately). IRS Publication 936

These limits apply to the combined total of all your mortgages. For example, if you have two mortgages totaling $800,000 originated after December 15, 2017, you can only deduct the interest on $750,000 of the debt.

What Types of Interest Are Deductible?

Generally, the following types of interest are deductible, subject to the limitations above:

• Acquisition Debt: Interest paid on a loan used to purchase your home.
• Home Improvement Loans: Interest paid on a loan used to make substantial improvements to your home.
• Points: Points (loan origination fees) paid at closing may similarly be deductible. TurboTax

Situations with Specific Rules

• Second Homes: You can deduct mortgage interest on a second home, as long as it meets the requirements for a qualified home.
• Rental Properties: Interest on loans used for rental properties is generally not deductible as an itemized deduction, but can be claimed as a rental expense. TurboTax
• Married Filing Separately: The deduction limits are halved for married taxpayers filing separately ($375,000 or $500,000 depending on when the loan was originated). IRS Publication 936

How to Claim the Deduction

To claim the mortgage interest deduction, you will demand to:

1. Itemize Deductions: On Schedule A (Form 1040).
2. Form 1098: Receive Form 1098, Mortgage Interest Statement, from your lender. This form reports the amount of mortgage interest you paid during the year.
3. Report the Interest: Enter the amount of mortgage interest from Form 1098 on Schedule A.

Key Takeaways

• The mortgage interest deduction can significantly reduce your tax liability.
• Deduction limits apply based on when the mortgage was originated ($750,000 for loans after December 15, 2017, and $1 million for earlier loans).
• You must itemize deductions to claim the benefit.
• Keep accurate records of your mortgage interest payments and Form 1098.