Deducting Mortgage Payments

Today TaxMama hears from Brandi in Indiana. She asks. “Can you deduct your mortgage payment for a rental property after the insurance, interest and taxes have been deducted?”

Dear Brandi,

Are you talking about the mortgage principal?
The part of the payment that reduces your loan balance?

Of course you can’t deduct it.

That’s you, paying yourself, increasing your equity in the property. You’re already deducting the cost of the asset when you take depreciation. (You ARE taking depreciation, right?)

I have seen people get so angry about not being able to deduct loan principal – especially when they make a big principal payment. In fact, I had a client whose boyfriend lent her $50,000 to pay off the Nautilus equipment loan for her gym. She actually stopped talking to me when I refused to take that principal payoff as a deduction. I can see how hard it can be to understand that you’ve already used that deduction (or are using it via current depreciation) when you’re writing that big check.

And remember, you can find answers to all kinds of questions about loan payments and other tax issues, free. Where? Where else? At TaxMama.com

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