what is tax deductible interest 
tax deductible interest is a borrowing expense that a taxpayer can claim on a federal or state tax return to reduce their taxable income several types of interest are tax deductible including mortgage interest on a primary or second home student loan interest and interest on some business loans including business credit cards understanding tax deductible interestinterest is the amount of money you pay a lender for the privilege of borrowing money or delaying the repayment of a debt all loans incur interest which the lender may roll into your monthly payment for example you pay back a portion of the principal i e the amount you borrowed plus interest every month with most mortgages on the other hand revolving loans like credit cards accrue interest only on unpaid balances to make certain loans more affordable the irs allows you to deduct several types of interest expenses including not all types of interest are deductible specifically the irs does not allow you to deduct personal interest such as student loan interest tax deductionwhile you can t deduct your student loans you can get a tax break on the interest you pay by claiming the student loan interest deduction generally you can deduct the smaller of 2 500 or the interest you actually paid during the year however the deduction may be gradually reduced phased out and eventually eliminated depending on your filing status and modified adjusted gross income magi 23to claim the deduction you must meet all of the following conditions a qualified student loan is a loan you took out to pay qualified higher education expenses for you your spouse or your dependent the loan can t be from a related person or made under a qualified employer plan additionally the loan must pay for qualified educational expenses for you your spouse or your dependent during an academic period in which the student is enrolled at least part time in a degree program quarters trimesters semesters and summer school sessions count as academic periods qualified expenses include if you paid at least 600 in student loan interest you should receive form 1098 e from your student loan servicer 4the student loan interest deduction is taken as an income adjustment so you don t need to itemize your deductions instead you can enter the allowable amount directly on form 1040 or 1040 sr 5mortgage interest tax deductionyou can deduct the mortgage interest you pay on the first 750 000 375 000 if married filing separately of mortgage debt if you bought the home before dec 16 2017 a higher 1 million 500 000 if married filing separately limit applies the loan must be secured by your main home or a second home according to the irs your main home is where you live most of the time whether that s a house co operative apartment condominium mobile home house trailer or houseboat a second home can include any other residence you own and treat as a second home even if you don t use it during the year however if you rent out the property you must use it for 14 days or at least 10 of the number of days you rent it whichever is greater for the interest to count as qualified residence interest all homes must have sleeping cooking and toilet facilities 6you can deduct home equity loan interest but only if you use the funds to buy build or substantially improve the home that secures the loan 7your lender will send you form 1098 to report qualified mortgage interest and points to claim the tax break you must itemize your deductions on schedule a of your 1040 or 1040 sr form you can also deduct the mortgage interest you pay on a rental property but you report it on schedule e since it counts as a business expense 8watch for changes in what s deductibleinterest deductions are subject to limitations and exclusions which can change from year to year for example taxpayers used to be able to claim the mortgage interest deduction on the first 1 million of mortgage debt for loans originating after dec 15 2017 the allowable debt amount is 750 000 due to the tax cuts and jobs act 9be sure that you understand the rules and confirm your eligibility before claiming any deductions when in doubt consult with a qualified tax professional 