Are You Getting Your Mortgage Interest Deduction? A Practical Guide for Korean Americans

If you've purchased a home in the U.S., one of the most valuable tax breaks you can take advantage of is the Mortgage Interest Deduction. Yet many Korean American homeowners either overlook it entirely or aren't sure whether they qualify. Understanding the basics before tax season can potentially save you hundreds — or even thousands — of dollars.

Who Qualifies and How Much Can You Deduct?

For homes purchased after December 15, 2017, you can deduct interest on up to $750,000 of mortgage debt (for married filing jointly). Homes purchased before that date may qualify for up to $1,000,000. The key catch: this deduction only applies if you itemize deductions on Schedule A instead of taking the standard deduction. For tax year 2024, the standard deduction is $29,200 (married filing jointly) and $14,600 (single). Itemizing makes sense only when your total deductions — mortgage interest, property taxes, charitable contributions, etc. — exceed those amounts. In high-cost markets like Los Angeles, New York, or the Bay Area, where mortgage balances tend to be large, itemizing often comes out ahead.

Documents You Need and How to File

Gathering the right paperwork makes the process straightforward.

• Form 1098 (Mortgage Interest Statement): Your lender — Chase, Wells Fargo, Bank of America, etc. — will mail or post this online by late January or early February. It shows the total interest you paid during the year.
• Schedule A (Form 1040): Enter your mortgage interest from Form 1098 on Line 8a. Tax software like TurboTax or H&R Block will automatically transfer the amount when you input your 1098 details.
• Interest on a second home is also deductible, subject to the same overall limit. Rental properties follow different rules under Schedule E.

If you work with a CPA, bring your Form 1098 along with your other tax documents to your appointment.

Common Mistakes Korean American Homeowners Make

• Refinancing: Interest on a refinanced loan is still deductible, but only up to the $750,000 cap. Cash-out amounts used for non-home purposes may not qualify.
• Mortgage Points: Prepaid interest (points) paid at closing can often be deducted in the year paid. Check Box 6 on your Form 1098.
• What's NOT deductible: HOA fees, homeowner's insurance premiums, and principal payments do not qualify.
• State taxes: Most states — including California and New York — allow a similar mortgage interest deduction on your state return, so don't forget to claim it there too.

Everyone's tax situation is different, and this article is intended for general informational purposes only. For advice tailored to your specific circumstances, please consult a licensed CPA or qualified tax professional.