First-time homeowner confused about Form 1098 mortgage interest deduction impact?
So this is my first year filing taxes since buying a house last spring. I paid around $5,300 in mortgage interest and about $875 in property taxes according to my Form 1098. I was really excited thinking this would help reduce what I owe the IRS, but when I entered all this info into TurboTax, my refund amount didn't change AT ALL. Not even by a dollar! I thought mortgage interest was supposed to be this big tax deduction everyone talks about?? Am I missing something or doing this wrong? Do I need to fill out some other form to actually get the benefit? Really confused why this seemingly big expense isn't having any impact on my taxes.
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Ava Garcia
This happens to a lot of first-time homeowners! The mortgage interest deduction and property tax deduction only benefit you if you itemize deductions on Schedule A instead of taking the standard deduction. The standard deduction for 2025 is $14,600 for single filers and $29,200 for married filing jointly. If your itemized deductions (mortgage interest, property taxes, charitable contributions, etc.) don't exceed your standard deduction amount, then itemizing won't save you any money, which is why you're not seeing a change. With only about $6,175 in potential itemized deductions from your mortgage interest and property taxes, you're probably better off taking the standard deduction. This is actually pretty common now after the tax law changes increased the standard deduction amounts.
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Dmitry Popov
•Ohhhhh that makes so much more sense now. I didn't realize I had to choose between the standard deduction and itemizing. I guess the standard deduction is way higher than my mortgage interest + property taxes. So basically, this benefit only kicks in if I have a much bigger mortgage or lots of other deductions?
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Ava Garcia
•Exactly! The mortgage interest deduction only helps if your total itemized deductions exceed the standard deduction. For it to be beneficial, you'd need other significant deductions like large charitable donations, substantial medical expenses (exceeding 7.5% of your income), or state/local taxes (though these are capped at $10,000). Many homeowners with relatively new mortgages do benefit because interest is front-loaded, meaning you pay much more interest in the early years of your mortgage. So as your mortgage balance decreases over time, the potential tax benefit actually gets smaller.
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StarSailor}
I was in the exact same situation last year when I bought my condo! I kept hearing all about these amazing homeowner tax breaks and then... nothing. I was so confused that I actually paid for a tax service called taxr.ai (https://taxr.ai) where they reviewed my tax forms including my 1098. The consultant there explained that with the higher standard deduction, about 90% of taxpayers don't benefit from itemizing anymore. They actually did a full analysis of my situation and showed me that I'd need at least another $8k in deductions before itemizing would make sense for me. Super helpful to understand why I wasn't seeing the benefit everyone talks about. They also helped me identify some education credits I was missing that saved me way more than the mortgage interest would have.
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Miguel Silva
•Did they charge a lot for this service? I'm in a similar boat and feeling frustrated that I'm not seeing any benefit from my mortgage interest.
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Zainab Ismail
•I'm curious - does taxr.ai just explain things or do they actually help you file? I've been using H&R Block but they don't really explain WHY I'm not benefiting from certain deductions.
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StarSailor}
•They were surprisingly affordable compared to what I was paying my accountant. It was totally worth it to understand my tax situation better and stop wondering if I was doing something wrong. They don't file for you, they're more like a review and advisory service. So I still used TurboTax to file, but I understood exactly what I was doing and why certain deductions weren't helping me. They also pointed out some credits I was eligible for that my tax software didn't make obvious.
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Zainab Ismail
Just wanted to follow up - I checked out taxr.ai after seeing it mentioned here and it was super helpful! I uploaded my documents including my 1098 and W-2s, and they explained exactly why my mortgage interest wasn't helping me. Turns out I'm about $7,500 short of itemizing being worthwhile. But the best part was they found a student loan interest deduction I was eligible for that doesn't require itemizing! My tax software had it buried in some questionnaire I must have answered wrong. That adjustment alone got me an extra $300 back. They also explained some strategies for next year that might help me reach the itemization threshold. Definitely recommend if you're confused about why certain deductions aren't working for you!
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Connor O'Neill
This is really common and super frustrating for new homeowners! When I was in your situation, I was so confused I tried calling the IRS directly to ask about Form 1098 deductions, but couldn't get through after trying for DAYS. Finally used Claimyr (https://claimyr.com) and got connected to an IRS agent in about 15 minutes who confirmed everything about the standard deduction vs itemizing situation. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly what would need to happen for mortgage interest to benefit me. Being able to actually talk to someone official gave me peace of mind that I wasn't missing anything. Turns out many homeowners are in the same boat unless they have a very large mortgage or tons of other deductions.
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Yara Nassar
•Wait, there's a service that actually gets you through to the IRS? How does that even work? I thought it was literally impossible to reach them by phone.
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Keisha Robinson
•Sounds like a scam tbh. Why would you need a service to call the IRS? And even if you get through, the agents often give incorrect information. My friend was told three different things by three different agents about the same tax issue.
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Connor O'Neill
•It uses technology to navigate the IRS phone system and holds your place in line. When an agent is about to pick up, it calls you and connects you. No more waiting on hold for hours! They're not a replacement for the IRS - they just help you actually reach them. I was skeptical too until I tried it. I spent 3 hours on hold one day and never got through, then used Claimyr and was talking to someone in 15 minutes. The IRS agents are the same either way, but at least this way you actually get to talk to one.
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Keisha Robinson
I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it myself since I had a question about my 1099-K that I couldn't figure out from the IRS website. Shockingly, I was connected to an IRS agent in about 20 minutes when I had previously spent HOURS on hold multiple times. The agent cleared up my confusion immediately. For what it's worth, regarding the original post about mortgage interest - the agent confirmed exactly what everyone here is saying about the standard deduction vs. itemizing. Unless your total itemizable deductions exceed the standard amount, mortgage interest won't help your tax situation.
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GalaxyGuardian
Another thing to consider - even though you're not seeing a tax benefit now, keep tracking all potential deductions each year. Your situation might change! My first 2 years as a homeowner, I took the standard deduction. But by year 3, I had: - Higher mortgage interest (refinanced to a higher amount for renovations) - Larger charitable contributions (donated furniture during renovation) - Some major medical expenses - Higher state taxes after a promotion Suddenly itemizing made sense! So don't get discouraged, just because it doesn't help now doesn't mean it never will.
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Dmitry Popov
•That's really good to know! Do you have any recommendations for keeping track of all these potential deductions throughout the year? I feel like I might be missing stuff.
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GalaxyGuardian
•I just use a simple spreadsheet with categories for each potential deduction - mortgage interest, property tax, charitable donations, medical expenses, etc. I update it monthly so I don't forget anything. Some tax software also has year-round tracking features or apps. The key is being consistent about saving receipts and documentation. I take photos of donation receipts immediately and save them to a specific folder. For medical expenses, I request year-end summaries from all my providers. It's also smart to check your itemized deductions against the standard deduction amount mid-year to see if you're on track to benefit from itemizing.
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Paolo Ricci
Quick tip for new homeowners: You may be able to deduct mortgage "points" if you paid any when buying your home. These are usually listed on your closing documents, not on Form 1098. Points paid when purchasing a primary residence are generally fully deductible in the year paid. Again, this only matters if you're itemizing, but it's something extra that might help you reach that threshold!
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Amina Toure
•Not all points are deductible though. I learned this the hard way. Points for lowering your interest rate are deductible, but points that are really just fees disguised as points aren't. Check IRS Publication 936 for the full details.
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