You’ll need to itemize your deductions to claim the mortgage interest deduction. Since mortgage interest is an itemized deduction, you’ll use Schedule A (Form 1040), which is an itemized tax form, in addition to the standard 1040 form.

What is the maximum mortgage interest deduction for 2018?

$750,000
Yes, your deduction is generally limited if all mortgages used to buy, construct, or improve your first home (and second home if applicable) total more than $1 million ($500,000 if you use married filing separately status) for tax years prior to 2018. Beginning in 2018, this limit is lowered to $750,000.

What’s the limit for mortgage interest deduction for 2018?

Finally, people who closed on a home purchase before January 1, 2018 can also use the old limit of $1 million—provided they purchase the residence by April 1. Besides reducing the maximum deduction for mortgage interest, the new rules completely eliminate the deduction for interest paid on other home equity debt.

How do I calculate tax savings on mortgage interest?

If you itemize your deductions, you can deduct mortgage interest paid up to a certain amount. This deduction will reduce your taxes by whatever percentage represents your marginal tax rate. Calculating tax savings from mortgage interest will depend upon your tax bracket and how much interest you paid.

How can I maximize my mortgage interest deduction?

To maximize your mortgage interest tax deduction, utilize all your itemized deductions so they exceed the standard income tax deduction allowed by the Internal Revenue Service. The federal standard deduction is high enough that you’re unlikely to claim the mortgage interest deduction unless you earn a significant income.

What happens to the mortgage interest deduction in 2017?

With the passage of the TCJA, a 2017 White House commissioned study predicted that nine out of 10 people would opt for the standard deduction, forgoing use of the mortgage interest tax deduction entirely. That means 90% of homeowners paying interest would receive no benefit at all.