So, you want to deduct home mortgage interest. Hi Bob Jennings here, let's talk about deducting home mortgage interest on your personal tax return. There are five main points to be able to deduct that interest. But before we do that, let's clarify one of the most common misconceptions in America. You are never ahead of the game by having a mortgage on your home. As an example, we do not have a 100% tax rate. If you pay a thousand dollars in interest on your home mortgage, the highest tax rate currently in the United States is thirty five percent. This means that the most you can save out of that thousand dollars is three hundred and fifty dollars on your tax returns. So, you will still be out six hundred and fifty dollars out of pocket in cash. Alright, now that that's out of the way, point number one to deduct your own mortgage is that the home has to be legally secured by the loan. The loan has to be attached to the home and legally filed with the courthouse. Now, what does this mean for most of us? It means nothing. You buy your home, you finance it with a bank. The bank secures the mortgage at the courthouse legally and you get to deduct that interest. On rare occasions, some people will buy a home on contract. That means that the seller is financing the home for you. If the seller has recorded that deed at the courthouse, you get to deduct the interest. If they have not, you don't get to deduct it. And finally, third on this first point, if you are borrowing money from a family member or friend to pay for your home, unless that family member or friend secures that...
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Mortgage interest deduction example Form: What You Should Know
Mortgage Interest Deduction: What Qualifies in 2021 Jan 10, 2025 and after — You must qualify for an election to deduct and deduct the interest on all indebtedness up to the current year maximum of 750,000 on your Form 1040 and Schedule A. (Form 1040), Schedule F if you are filing separately and Schedule E if you married filing separately. Ex: For a couple living in 2016, Maria and William, the interest paid in February 2025 was 2,000. If the couple filed in 2021, the max is a maximum of 11,750. Thus, they have to elect at least 12,000 to deduct, or 12,000 × 7/12 = 6,032, or 625. Since Maria and William aren't currently paying any mortgage interest, they might qualify for an interest deduction today in 2021. Mortgage Interest Deduction: What Qualifies in 2018 May 10, 2025 — You can deduct all interest paid on mortgage debt up to the amount you paid in 2018. Interest paid during the year would count toward mortgage interest deduction eligibility. This interest should be paid through your state or local government as a public or nonprofit loan. Mortgage interest deduction for 2025 — If you are married filing a joint return, the maximum amount you can deduct in 2025 is 12,000 (up to 75,000 if married filing separately) and the maximum amount you can deduct on your 2025 return is 22,000 (75,000 in 2025 minus 14,000 if married filing separately).  The interest owed on your home will increase the first 400,000 of indebtedness that is 750,000 or more, up to a maximum of 14,000 (150,000 with a married couple filing jointly). Once the 14,000 limit is reached you are no longer entitled to an interest deduction. However, if you are married filing separate if you and your spouse meet the following requirements: You owned your home for at least two years before the date of your divorce. Your income is at least two times your filing status in the highest tax bracket.
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