Can you still deduct mortgage interest in 2020?

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Howell Haley asked a question: Can you still deduct mortgage interest in 2020?
Asked By: Howell Haley
Date created: Thu, Jun 17, 2021 7:38 AM
Date updated: Thu, Jun 23, 2022 1:05 PM

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Video answer: The mortgage interest deduction in 2019/2020

The mortgage interest deduction in 2019/2020

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The 2020 mortgage interest deduction

Mortgage interest is still deductible, but with a few caveats: Taxpayers can deduct mortgage interest on up to $750,000 in principal… Home equity debt that was incurred for any other reason than making improvements to your home is not eligible for the deduction.

Video answer: Can i deduct mortgage interest?

Can i deduct mortgage interest?

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Essentially you can claim a mortgage interest deduction on your tax return for any expenses related to the interest paid on your mortgage. This has not changed; however there are some key nuances related to the deduction limits

If you prepaid interest in 2020 that accrued in full by January 15, 2021, this prepaid interest may be included in box 1 of Form 1098. However, you can’t deduct the prepaid amount for January 2021 in 2020. (See Prepaid interest, earlier.) You will have to figure the interest that accrued for 2021 and subtract it from the amount in box 1.

If you signed after that date, you can deduct interest on a loan of up to $750,000. And remember, it's the interest on your mortgage you're writing off, not your mortgage payments themselves.

As of April 2020, you are no longer able to deduct any of your mortgage expenses from rental income to reduce your tax bill. Instead, you'll receive a tax-credit, based on 20% of your mortgage interest payments.

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