Mortgage Interest Deduction Calculator
Calculate your mortgage interest tax deduction and estimated tax savings. Includes the $750K post-TCJA limit.
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Quick:
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Rates:
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SALT deduction is capped at $10,000
$7,020
Annual Tax Savings
$29,250
Deductible Interest
$29,250
Total Interest Paid
Yes
Should Itemize?
Deduction Analysis
| Item | Amount |
|---|---|
| Annual Interest Paid | $29,250 |
| Deductible Limit | $750,000 |
| Deductible Interest | $29,250 |
| Other Itemized Deductions | $10,000 |
| Total Itemized Deductions | $39,250 |
| Standard Deduction | $29,200 |
| Benefit of Itemizing | $10,050 |
| Marginal Tax Rate | 24% |
| Annual Tax Savings | $2,412 |
How the Mortgage Interest Deduction Works
The mortgage interest deduction allows homeowners who itemize to deduct interest paid on their primary (and one secondary) residence. You only benefit if your total itemized deductions exceed your standard deduction.
Formula
Annual Interest = min(Balance, Deductible Limit) Γ Interest Rate
Total Itemized = Mortgage Interest + Other Deductions
Benefit = max(0, Total Itemized - Standard Deduction)
Tax Savings = Benefit Γ Marginal Rate
Total Itemized = Mortgage Interest + Other Deductions
Benefit = max(0, Total Itemized - Standard Deduction)
Tax Savings = Benefit Γ Marginal Rate
Example
$450K balance at 6.5%, MFJ, 24% bracket, $10K other deductions:
Annual Interest = $450,000 Γ 6.5% = $29,250
Total Itemized = $29,250 + $10,000 = $39,250
Standard Deduction (MFJ) = $29,200
Benefit = $39,250 - $29,200 = $10,050
Tax Savings = $10,050 Γ 24% = $2,412/year
Annual Interest = $450,000 Γ 6.5% = $29,250
Total Itemized = $29,250 + $10,000 = $39,250
Standard Deduction (MFJ) = $29,200
Benefit = $39,250 - $29,200 = $10,050
Tax Savings = $10,050 Γ 24% = $2,412/year
Extended
Rent vs Own Tax Comparison
Compare the after-tax cost of renting vs owning for your situation
Rent vs Own After-Tax Comparison
Compare the true after-tax cost of owning vs renting.
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| Category | Renting | Owning |
|---|---|---|
| Housing payment | $2,500/mo | $2,844/mo |
| Property tax | $0 | $583/mo |
| HOA + Insurance | $0 | $200/mo |
| Tax savings (monthly) | $0 | -$201/mo |
| Total After-Tax Cost | $2,500/mo | $3,426/mo |
Frequently Asked Questions
What is the mortgage interest deduction limit?
Under the Tax Cuts and Jobs Act (TCJA) of 2017, you can deduct interest on up to $750,000 of mortgage debt for loans taken after December 15, 2017. Loans prior to that date retain the $1,000,000 limit.
Do I need to itemize to claim the mortgage interest deduction?
Yes. The mortgage interest deduction is an itemized deduction. You can only benefit from it if your total itemized deductions exceed the standard deduction ($14,600 single / $29,200 married filing jointly in 2024).
Can I deduct interest on a second home?
Yes, you can deduct mortgage interest on a second home, subject to the same $750,000 combined debt limit. The property must be secured by the loan and used as a residence.
Is mortgage interest deductible on rental property?
Mortgage interest on a rental property is deductible as a business expense on Schedule E, not as an itemized deduction. There is no dollar cap for rental property loans.
Will the $750K cap revert?
The TCJA provisions are set to expire after 2025. If Congress does not act, the limit would revert to $1,000,000 for tax year 2026. Always check current law before filing.