Quick background – purchased a home in 2025, mortgage was $870k, and during tax filing season learned that the mortgage interest deduction is capped at $750k meaning I can only claim 86% of the interest paid.
Thinking through strategy for 2026, am I incentivized to pay down the mortgage faster to get that balance closer to $750k if I can? Rate is 6.125%, and in theory with the tax deduction it would make sense to move $ from a 3-4% high yield account (beyond my emergency fund) that is taxable towards the mortgage right?
What am I potentially missing or not thinking through adequately?
Advice on maximizing mortgage interest deduction
byu/pants19 intax
Posted by pants19
2 Comments
Just let it happen naturally. If you want to pay down your mortgage… great.
But keeping that sort of debt solely for a tax deduction is a logical fallacy.
You need a tax planner. Do you know what the benefit would be from getting the full deduction? A lot of this hinges on what your actual income and tax liability are. Do the tax savings justify paying down the mortgage is the question here.