Question: My husband and I are new homeowners. Can we deduct our mortgage interest and property taxes on this year’s tax return?
Narrator: Hello, this is Tiffany Smith from TurboTax. Yes, if you itemize your deductions on Schedule A of your 1040, you can deduct the mortgage interest and property taxes you’ve paid.
In fact, if you meet the basic requirements, you can deduct the interest you pay on a mortgage on either your primary residence or a second home and the property taxes on any property you own..
Many different types of loans qualify for the mortgage interest deduction:
- A mortgage you use to buy or improve your home
- A second mortgage
- A line of credit
- A home equity loan
To qualify for the mortgage interest deduction, the loan must be for either your first or second home. That means you can’t deduct the mortgage interest on a third or fourth home. Loans that are not secured by your home are usually considered to be personal loans and the interest is not tax deductible.
You can deduct the interest on mortgages of up to $1 million that you use to buy, construct or improve your first or second home. You can also deduct the interest on up to $100,000 of home equity debt regardless of how you use the loan proceeds. That means you can use a home equity loan to buy a car or pay your daughter’s college tuition and still deduct the interest.
If you itemize your deductions you can also deduct the property taxes you pay on any residence or land that you own. That means the property doesn’t have to be your primary residence or second home. You can even deduct the property taxes on unoccupied land you own.
For more information on deducting mortgage interest and property taxes, visit Turbotax.com.