QCan I Deduct My Entire Mortgage Payment?
ANo, you can only deduct the interest. However, during the early years of your loan, most of your payment will be deductible because most of each monthly payment goes to pay interest. Very little principal is paid back. For example, at the end of the first year of a 30-year fixed-rate mortgage at 8 percent, less than 1 percent of the principal is repaid. The longer you pay on an amortized loan, the more of each monthly payment goes to pay the principal and less goes toward interest. You lose some of your interest write-off as you build equity in the property, in other words.