Money Girl answers a reader question about mortgage interest rate deduction.
Reader Shaz wants to know:
What is a mortgage interest deduction and am I required to include it on my tax return?
ANSWER: The mortgage interest deduction is a tax benefit that's offered to encourage homeownership.
No taxpayer is required to claim a tax deduction or credit that they're entitled to. However, when a benefit can reduce your tax bill and save you money, it's certainly wise to take it! The mortgage interest deduction is one of the best money-saving tax breaks out there.
Who Qualifies for the Mortgage Interest Deduction?
The interest you pay on a mortgage or a home equity line of credit (HELOC) for your primary residence or a second home can be deducted from your income when the following 2 conditions are met:
- You file taxes on Form 1040 and itemize deductions on Schedule A.
- The mortgage is a secured debt on a qualified home in which you have an ownership interest.
When Should You Itemize Deductions?
- Single: $5,950
- Married Filing Separately: $5,950
- Head of Household: $8,700
- Married Filing Jointly: $11,900
What Expenses are Tax Deductible?
Get Answers to FAQ on the Mortgage Interest Deduction
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