When does mortgage interest qualify for the mortgage interest deduction?

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Mortgage interest deduction applies to qualified home mortgage interest paid on the home you live in, and it can also apply to a second home if the loan meets the requirements. The key factor is that the loan must be secured by the home and used to buy, build, or substantially improve the residence, with the interest amounts reported to you on Form 1098 by the lender. You can claim this deduction only if you itemize deductions on Schedule A; if you take the standard deduction, you don’t get this benefit. Interest on loans for investment or rental properties isn’t part of the personal mortgage interest deduction and is handled differently on your tax return (rental interest goes on Schedule E). Note that the rules about how much debt qualifies have changed over time, but the essential idea is that you deduct qualified home mortgage interest reported on Form 1098 when you itemize.