Do you think your mortgage is just a monthly bill? It might be one of the most valuable tax tools you have. If you paid mortgage interest in 2024, Form 1098 could help you unlock serious savings on your 2025 tax return. But, only if you know how to use it.
This IRS form breaks down how much interest, points, and insurance premiums you paid, and what may qualify for a deduction. Plus, here’s something most homeowners miss: the IRS allows you to deduct construction loan interest for up to 24 months if the property becomes your main home.
In this article, learn exactly how to make Form 1098 work for you.
What Is IRS Form 1098 and Why Should You Care?
What does Form 1098 report for your taxes?
Form 1098 Mortgage Interest Statement is more than just a document—it's your ticket to a potential tax deduction. This IRS form 1098 is used by your lender to report the amount of mortgage interest you paid during the tax year.
Here’s what the form reports:
- Total mortgage interest paid
- Mortgage insurance premiums
- Mortgage points paid at closing
- Loan origination details, including loan amount and original issue date
- Outstanding balance at year-end
If your total interest paid hits $600 or more, you're supposed to receive a Form 1098 by January 31. You’ll need this tax form to use Form 1040 Schedule A and claim the deduction.
Who gets Form 1098 and when?
You’ll receive a Form 1098 if you made payments on a home loan, including:
- A first mortgage
- A second home
- A refinanced mortgage
- A home equity line of credit (HELOC)
Lenders must file a Form 1098 for each mortgage where interest payments meet or exceed $600. If you don’t get one, it doesn’t mean you can’t deduct the mortgage interest—but you’ll need to calculate and document everything on your own.
Further Reading: Learn how to deduct the interest you paid on your mortgage
How Can You Use Your Mortgage Interest Statement to Lower Taxes?
Can you deduct mortgage interest from your taxes?
Yes—you may be able to deduct the mortgage interest if you itemize deductions on your federal tax return using Form 1040. Eligible deductions include interest paid on:
- A primary residence
- A second home
The IRS allows a mortgage interest deduction on loans up to $750,000 (or $1M if the loan originated before December 16, 2017). This tax-saving strategy could reduce your taxable income significantly—especially for self-employed filers or sole proprietors working from home.
What about construction loans or home improvements?
The IRS tax guidelines say you can deduct interest on a construction loan for up to 24 months, as long as the home becomes your primary residence when it’s done【IRS Pub 936】.
You can also deduct a portion of the interest if you took out a loan to:
- Add a new room or renovate an existing space
- Install energy-efficient systems
- Make eligible upgrades that increase property value
As long as the expense qualifies, the interest deduction applies. Just make sure to use Form 1098 to report and back it up.
What Are the Requirements for a Mortgage Interest Deduction?
Do you need to itemize to claim this deduction?
Yes—you can’t claim the mortgage interest deduction if you’re using the standard deduction:
- $14,600 for single filers
- $29,200 for married filing jointly (2024 tax year)
To benefit, your itemized deductions (mortgage interest, property taxes, charitable donations, etc.) must exceed the standard deduction. If they do, you’ll report tax-deductible interest using Form 1040 Schedule A.
Are there limitations or exceptions?
Some expenses that feel mortgage-related aren’t deductible, like:
- Late payment fees
- Prepaid interest that doesn’t meet IRS criteria
- Interest on personal loans or rental income loans (those go on Schedule E)
- Mortgage points on a refinance (you may have to amortize them)
Always confirm what’s eligible before assuming it's a tax credit or deduction. And if your mortgage servicer makes a mistake, you're still the one responsible during an audit.
Further Reading: Learn the difference between loan principal and interest in mortgages
What Happens If You Don’t Receive a 1098 Form?
Can you still deduct mortgage interest without the form?
Yes, but you need solid records. Some lenders—especially in owner-financed sales or certain private loans—aren’t required to send you a copy of Form 1098 if you paid under $600 in interest.
Even if you don’t receive a form, the IRS still expects accuracy. You can still report mortgage interest and deduct mortgage expenses if they qualify.
How do you document your interest payments without Form 1098?
You’ll need to pull together:
- Monthly interest statements from your servicer
- Year-end loan summaries
- Canceled checks or electronic payment records
- Any closing documents detailing mortgage points or insurance premiums
Keep this documentation for at least 3 years in case of an IRS audit. The burden of proof is yours, not your lender’s.
How Do You Maximize Tax-Saving Strategies With Your Mortgage?
Can mortgage interest deduction be combined with other deductions?
Absolutely. You can stack deductions like:
- Property taxes (within the SALT cap of $10,000)
- Mortgage points (deductible in the year paid or over the loan term)
- Mortgage insurance premiums (for eligible taxpayers, based on income limits)
Combining deductions boosts the chance that your itemized deductions will beat the standard deduction—which means actual tax savings.
What tax planning strategies should homeowners consider?
Here’s how to make the most of your mortgage interest statement:
- Recalculate annually: If you refinance, the amount of interest paid changes, and so does the deduction. New loans may come with points, which offer another tax-saving opportunity.
- Deduct a portion for business use: If you’re a homeowner running a business or using part of your home as a home office, you may be eligible to allocate a portion of the interest as a business expense on your tax return.
Smart taxpayers don’t just use Form 1098 to report—they use it to strategize.
Key Takeaways
- Form 1098 reports how much mortgage interest you paid—don’t ignore it.
- You must itemize deductions to claim mortgage interest on your tax return.
- Interest over $600 triggers a 1098 form from your lender.
- Construction loan interest may be deductible if it becomes your main home.
- You can still deduct mortgage interest without Form 1098—just keep solid records.
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