Mortgage Tax Deductions Every Michigan Homeowner Should Know for 2026 Tax Season
- Maria Tornga
- Jan 20
- 3 min read
Owning a home is one of the biggest financial commitments most people ever make — but it also comes with some meaningful tax advantages if you know what to look for.
Whether you bought a home recently, refinanced, or are planning to buy soon, understanding how mortgages impact your taxes can help you make smarter financial decisions year-round — not just in April.
Here’s a clear breakdown of the most common mortgage-related tax deductions, what still applies in 2026, and what Michigan homeowners should pay special attention to.
Mortgage Interest: The Biggest Tax Benefit of Homeownership
For many homeowners, mortgage interest is the largest potential deduction.
If you itemize your deductions, you may deduct interest paid on:
Up to $750,000 of mortgage debt
Your primary residence and one second home
Your lender will send Form 1098 each January showing how much interest you paid the prior year.
Important to know:With today’s higher standard deduction, itemizing often makes the most sense in the early years of a mortgage, when interest payments are highest.
Property Taxes & the $10,000 SALT Cap
Property taxes may also be deductible — but with limits.
You can deduct up to $10,000 total in combined:
State income taxes
Local taxes
Property taxes
This is known as the SALT cap.
Michigan homeowner tip
If your property taxes are paid through escrow, they’ll show on your 1098.If you pay them directly to your local treasurer, keep those receipts.
Also, some Michigan homeowners may qualify for state-level property tax credits, which are separate from federal deductions and worth reviewing with a tax professional.
Mortgage Points: A Commonly Missed Deduction
If you paid discount points to lower your interest rate, those may be deductible.
Home purchase:Points are often deductible in the year you paid them (if IRS requirements are met).
Refinance:Points are typically deducted over the life of the loan.
Check your closing disclosure — points may be listed as:
Discount points
Loan origination fees
Home Equity Loan & HELOC Interest Rules
Interest on a home equity loan or HELOC is not automatically deductible.
It only qualifies if the funds were used to:
Buy
Build
Substantially improve the home securing the loan
Examples of qualifying uses:
Renovations or additions
Roofing, HVAC, windows
Major structural upgrades
📌 Documentation matters. Keep receipts and invoices.
PMI & Mortgage Insurance: What to Know
The deductibility of PMI and mortgage insurance premiums has changed over time and depends on current tax law and income limits.
If you’re paying PMI:
Ask your tax preparer whether it applies this year
If your home value has increased, you may be able to remove PMI once you reach 20% equity
That can reduce your monthly payment — regardless of tax deductions.
Getting Ready to File: What to Gather
Before meeting with your tax professional, collect:
Form 1098 from your lender
Your closing disclosure (if you bought or refinanced recently)
Property tax records
Receipts for home improvements (if using equity funds)
Mortgage decisions don’t just affect your monthly payment — they shape your overall financial picture.
How Mortgage Strategy Impacts Taxes (More Than People Realize)
We often see homeowners focus only on rate or payment — but loan structure, equity use, and timing all matter long-term.
A refinance, equity strategy, or even PMI removal can:
Improve monthly cash flow
Change tax deductions
Support larger financial goals
That’s why mortgage planning shouldn’t happen in isolation.
What to Do Next
If you’re:
Buying your first home
Considering a refinance
Using home equity
Paying PMI
Unsure how your mortgage fits into your financial plan
👉 Let’s talk.A short conversation can help you understand whether your current mortgage still makes sense — or if there’s an opportunity to improve it.
Get Pre-Approved or Schedule a Consultation: https://www.mortgageuploans.com/apply-now
FAQs
Do I have to itemize to deduct mortgage interest?
Yes. Mortgage interest is only deductible if you itemize instead of taking the standard deduction.
Is HELOC interest always deductible?
No. Only when used for qualifying home improvements.
Does buying now vs. later affect tax benefits?
Yes. Mortgage interest is front-loaded early in the loan, which can impact itemized deductions.
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