# How to Calculate Mortgage Interest Tax Deductions

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You can deduct the interest portion of your mortgage payments on your personal tax return when you file with itemized deductions. Though your mortgage holder is required to send you a statement of interest you paid over the past year -- called a Form 1098 -- you can easily get a jump on figuring out your tax picture before it arrives. Lenders are required to send out the 1098 statements by Jan. 31 and your 1098 must be attached to your tax return when you use the interest deduction. Late fees and points also count as interest under the right circumstances.

## Step 1

Assemble your monthly mortgage statements for the tax year you are working on. If you closed escrow on your house during the year and paid points, then hunt down your settlement statement from escrow, as well.

## Step 2

Add up the interest amounts shown on each monthly statement. The monthly statements show the portion of each payment that went to principal, interest and escrow for taxes and insurance. Include only the interest in your calculations.

## Step 3

Sum up any late fees you were charged over the course of the year and add those amounts. Late fees are deductible as home interest if they are not a fee for a specific service.

## Step 4

Find the portion of your escrow that lists the points you paid at loan close. Points might also be called loan origination fees, maximum loan charges, loan discount fee or discount points. In general, points may be deducted in the year they were paid, on a home you use as your main home, if you directly paid into escrow an amount equal to the points. If they were added to your loan costs, rather than being paid by you, you won't be able to do this.

## Step 5

Add the totals in interest, late fees and points to estimate your deductible mortgage costs. When you do your taxes, this figure will be entered into line 10 of "Schedule A (1040) Itemized Deductions," or on line 11, if you paid that interest to a private party from whom you bought the home.

## Step 6

Compare your estimate to the figures provided on the 1098 statement provided by your mortgage holder. If the numbers are different, call your mortgage holder to discuss the differences and resolve the discrepancy.