Mortgage Interest Deduction on a Condo: The Honest Math

Updated 20 May 2026

The mortgage interest deduction is the most over-promised tax benefit of homeownership. Many first-time buyers expect it to be worth thousands; for many middle-income owners since the 2017 Tax Cuts and Jobs Act, it is worth nothing because they no longer itemise. This page covers the real federal rules (the $750K loan cap, the SALT $10K cap, points, what is and is not deductible), HOA fee treatment (not deductible on primary residence), and worked examples at two loan sizes.

Important

US federal tax rules change. The figures here reflect the rules in effect for tax year 2025 (filing in 2026). The 2017 TCJA provisions, including the $750K loan cap and $10K SALT cap, are scheduled to sunset at end of 2025 unless extended; check current IRS guidance before relying on specific numbers. This is informational, not tax advice; consult a CPA or enrolled agent for your situation.

The basics (federal)

What is deductible: interest paid on home acquisition debt secured by your primary residence and one second home, up to a combined $750,000 of loan principal (for loans originated after Dec 15, 2017).
Pre-2018 loans: grandfathered $1,000,000 cap remains.
Points: generally deductible in year paid if on your primary residence purchase.
State and local taxes (SALT): property tax, state income tax, sales tax combined capped at $10,000 per year (TCJA limit).
HOA fees: not deductible on primary residence (deductible on rental property as expense).
PMI / MIP: deduction expired after tax year 2021; not currently available for tax year 2025.
Standard deduction (2025): $15,000 single / $30,000 married filing jointly. You only benefit from itemising if your total itemised deductions exceed this.

Source: IRS Publication 936 (Home Mortgage Interest Deduction), IRS Publication 530 (Tax Information for Homeowners), IRC Section 163(h).

Worked example 1: $400K mortgage, married filing jointly

Couple with $150K household income, buys a $500K condo with 20% down ($100K), $400K mortgage at 7%. Year 1 mortgage interest: roughly $27,800. Property tax: $5,000. State income tax paid: $7,500. Charitable giving: $2,000.

Component	Amount
Mortgage interest	$27,800
SALT (capped at $10,000)	$10,000
Charitable giving	$2,000
Total itemised	$39,800
Standard deduction MFJ	$30,000
Net benefit of itemising	$9,800 x 22% = $2,156 tax saved

Worked example 2: $1M mortgage (hits the $750K cap)

Single buyer with $300K income, buys $1.25M condo with 20% down ($250K), $1M mortgage at 7%. Year 1 mortgage interest: roughly $69,400, but only the portion attributable to the first $750K of principal is deductible. That fraction is 75%, so deductible interest is roughly $52,000.

Component	Amount
Mortgage interest (cap-adjusted)	$52,000
SALT (capped)	$10,000
Total itemised (ex other)	$62,000
Standard deduction single	$15,000
Net benefit of itemising	$47,000 x 32% = $15,040 tax saved

Practical: middle-income buyers in low-tax states often save nothing from the mortgage interest deduction post-TCJA. High-income buyers in high-tax states with large loans still see meaningful savings, capped at the $750K loan and $10K SALT thresholds. HOA fees never become deductible on a primary residence.