How much mortgage interest is deductible?

Homeowners can deduct a portion of their mortgage interest from their taxable income. It is an itemized deduction, which reduces the amount of tax homeowners owe. This deduction also applies to second homes provided they are within the limits that the Internal Revenue Service (IRS) has set. 

For the 2023 tax year, the loan limit is $750,000. So married couples filing jointly individual filers, and heads of households could deduct mortgage interest rates up to $750,000. Married taxpayers filing individually can deduct $375,000 each. There are a few exceptions to this:

• Mortgages taken out before October 13, 1987, are considered grandfathered debt and unlimited. You can deduct all the interest payable on this debt. 
• A home purchased after October 17, 1987, and before December 16, 2017, is eligible for a $1 million limit.

Many types of loans qualify for mortgage interest deduction. Some of these are home loans taken to buy, build or improve homes. With a standard deduction, a flat amount is deducted from your taxable income and you don’t have to fill out additional forms for different types of loans and interest rates. With the itemized deduction, you’ll need to pick mortgage interest to claim a tax deduction on it, filling out additional forms for each kind of loan you have.