The mortgage interest deduction remains a powerful tool for Washington, DC homeowners to lower their annual tax liability.
By itemizing deductions, you can subtract the interest paid on your home loan from your taxable income. Brickfront Properties and Construction keeps you informed on 2026 tax law changes to ensure you maximize your real estate investment.
Eligibility: Who Qualifies in 2026?
The IRS requires you to meet specific standards to claim this tax break. You must use the loan to buy, build, or substantially improve your residence.
- Property Type: The debt must be secured by your primary residence or one designated second home.
- Loan Purpose: The funds must go toward “acquisition debt”—buying, constructing, or majorly renovating the property.
- Tax Strategy: You must choose to itemize your deductions rather than taking the standard deduction.
For 2026, the standard deduction has risen to $16,100 for single filers and $32,200 for married couples filing jointly. You should only itemize if your total deductions exceed these amounts.
Types of Deductible Loans
Most debt used to enhance your home’s value qualifies for a deduction. This includes:
- Primary Mortgages: Interest on your main purchase or construction loan.
- Home Equity Loans: Interest is deductible only if you use the money for “substantial improvements.”
- Refinanced Mortgages: You can deduct interest on a refinanced loan up to your original mortgage balance.
- Points: You can often deduct “mortgage points” paid at closing to lower your interest rate.
Starting in 2026, the One Big Beautiful Bill Act (OBBBA) allows you to once again deduct Private Mortgage Insurance (PMI) premiums as part of your interest deduction, subject to income phase-outs.
Deduction Limits for 2026
The law imposes a cap on the amount of debt eligible for interest deductions.
| Loan Date | Debt Limit (Joint Filers) | Debt Limit (Married Filing Separately) |
| After Dec. 15, 2017 | $750,000 | $375,000 |
| Before Dec. 15, 2017 | $1,000,000 | $500,000 |
The OBBBA has made the $750,000 cap permanent for all new loans. If your mortgage exceeds this limit, you can only deduct a percentage of the interest paid.
How to Claim Your Deduction
Follow these steps during the 2026 tax season to ensure accuracy:
- Obtain Form 1098: Your lender will send this form by January 31, detailing your total interest and points paid.
- Itemize on Schedule A: Use Form 1040, Schedule A, to list your mortgage interest alongside other deductions like SALT and charitable gifts.
- Verify Compliance: Ensure your loan proceeds actually went toward home improvement. Interest on home equity used for personal expenses—like vacations or debt consolidation—is not deductible.
Managing “unseen” details like tax compliance is as vital as managing advanced plumbing systems in your home. Brickfront Properties and Construction provides the technical and market expertise to keep your DC property thriving.
