Homeowners may expect to claim the interest paid on a mortgage if the qualifications are met. If a mortgage was handled by a mortgage company or bank in the U.S., an IRS Form 1098 will be issued. This form reports the amount a homeowner paid in interest for the previous year, any real estate taxes paid, as well as specifying any points paid through an escrow account set up by either the bank, mortgage company, or homeowner. As tax time approaches, it's critical to understand which tax deductions are allowable for each particular individual taxpayer.

For many folks, home mortgage payments make up a substantial portion of monthly and yearly bills. The interest paid on the mortgage each year is tax deductible if it's itemized on Schedule A of the Form 1040 tax return. As with anything run by the government, it seems simple at first. In the case of mortgage interest deductions, the rules are never as simple as they might first appear. A copy of the IRS Form 1040 and Schedule A can be picked up at any local post office or online at www.irs.gov.

2009 Tax Deduction for Mortgage Requirements

Individual homeowners must file Form 1040 and itemize deductions on Schedule A. If a mortgage was taken out prior to October 13, 1987, the full amount of all interest paid is deductible. These pre-1987 mortgages are referred to as grandfather debt. Interest on mortgages taken out by taxpayers to build, buy, or improve a home could be fully deductible if all the debt from any/all mortgages (including grandfathered debt) amounts to one million dollars or less for married folks, and five hundred thousand dollars or less for singles or married filing separately.