Mortgage Interest Deduction

AAA

DEFINITION of 'Mortgage Interest Deduction'

A common itemized deduction that allows homeowners to deduct the interest they pay on any loan used to build, purchase or make improvements upon their residence. The mortgage interest deduction can also be taken on loans for second homes and vacation residences with certain limitations. The amount of deductible mortgage interest is reported each year by the mortgage company on Form 1098. This deduction is offered as an incentive for homeowners.

INVESTOPEDIA EXPLAINS 'Mortgage Interest Deduction'

Home Mortgage Interest is reported on Schedule A of the 1040. Mortgage interest paid on rental properties is also deductible, but this is reported on Schedule E. Home Mortgage Interest is quite often the single itemized deduction that allows many taxpayers to itemize; without this deduction, the remaining itemized deductions would not exceed the standard deduction. Interest from Home Equity loans also qualifies as Home Mortgages Interest.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Consumer Interest

    A type of interest that is charged for personal loans, including ...
  3. Interest Deduction

    A deduction for taxpayers who pay certain types of interest. ...
  4. Income Tax

    A tax that governments impose on financial income generated by ...
  5. Itemized Deduction

    A deduction from a taxpayer's taxable adjusted gross income that ...
  6. Schedule A

    A U.S. income tax form used by taxpayers to report itemized deductions, ...
Related Articles
  1. Will You Break Even On Your Home?
    Budgeting

    Will You Break Even On Your Home?

  2. Calculating The Mortgage Interest Tax ...
    Home & Auto

    Calculating The Mortgage Interest Tax ...

  3. To Rent Or Buy? The Financial Issues
    Home & Auto

    To Rent Or Buy? The Financial Issues

  4. Tax Deductions On Mortgage Interest
    Taxes

    Tax Deductions On Mortgage Interest

comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center