Primary Mortgage

• If you took out your mortgage on or before October 13, 1987, you can write off all of the interest that you pay on this mortgage. If your mortgage began on October 14, 1987 or later, you can deduct only interest paid on the first $1 million of your mortgage, or the first $500,000 if you are married filing separately.
  
  

Second Mortgage

• If you have a second mortgage, which is sometimes known as a home equity loan or home equity line of credit, you might be able to deduct the interest paid on this as well. The total amount of your home equity debt on which you deduct interest cannot exceed $100,000, or $50,000 if you are married filing separately. In addition, you cannot deduct interest on any equity debt that exceeds the value of your home. For example, if your home would currently sell for $200,000 and you still owe $180,000 on your primary mortgage, you can deduct only interest paid on $20,000 of your home equity debt, even if you have $35,000 of home equity debt.
  
  

Procedure

• Your lender provides you with Form 1098, which lists how much interest you paid on your mortgage during the previous year. Include the amount of interest shown on each 1098 form on your Schedule A for itemized deductions. As of 2011, this amount goes on line 10 of Schedule A. You can also deduct mortgage insurance premiums on line 13. When you are filling out form 1040, use the total deductions from Schedule A instead of the standard deduction.
  
  

Considerations

• Depending on how much interest you pay and what other deductions you can take, it might be more advantageous for you to not write off your mortgage interest. You can either take the standard deduction, which in 2011 is $5,700 per person or $8,400 for a head of household, or you can itemize deductions. You want to itemize only if the interest you paid and your other deductions, such as state taxes and charitable contributions, add up to more than the standard deduction for which you would qualify. As you reduce the balance on your mortgage, you will pay less interest each year and eventually it will be more advantageous to take the standard deduction.