Using a mortgage to buy a house gives you access to one of the best tax breaks around: the mortgage interest deduction. However, because this is an itemized deduction, you'll need to take some additional steps to make sure you can really benefit from this tax break. That's because itemizing your deductions means you'll lose out on the standard deduction, so you'll need to gather enough other itemized deductions to make this approach worth your while.

Standard vs. itemized deductions

When you prepare your tax return, you have the choice of taking the standard deduction or of claiming whatever itemized deductions you're eligible to receive. Since you can only take one of these two options, it makes sense to itemize your deductions only if the resulting tax break is greater than the standard deduction. For 2017, the standard deduction is $6,350 for single filers, $9,350 for heads of household, and $12,700 for married filing jointly. The deduction is currently slated to go up slightly for 2018, to $6,500 for single filers, $9,550 for heads of household, and $13,000 for married filing jointly. These numbers don't take into account possible changes to the standard deduction as proposed by Congress.

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The mortgage interest deduction

As you'd expect from its name, the mortgage interest deduction allows you to deduct the interest you paid on your mortgage during the year. The current tax code allows you to deduct interest for purchase mortgages of $1 million or less; if you have multiple purchase mortgages, either on different houses or on the same house, they must total $1 million or less. Additional borrowings of $100,000 are allowed for home equity debt.

The mortgage must be on either your main residence or your second home. If you rent out your second home for part of the year, you can still claim the mortgage interest deduction for it if you lived in it for more than 14 days or more than 10% of the number of days you rented it out, whichever is greater. For example, if you rented out the house for 200 days this year, you would need to have stayed in it for at least 20 days yourself to claim the mortgage interest deduction.

As one of the largest itemized deductions, the mortgage interest deduction can be big enough all by itself to beat the standard deduction. However, if you're going to itemize at all, it just makes sense to claim as big a tax break as you can. So if you decide to go for the mortgage interest deduction, don't stop there -- look at the other big itemized deductions to see how much more of a tax break you can wring out of them.

How you can make your itemized deductions even larger

The best place to start looking for other itemized deductions is Schedule A to the 1040 tax return. This form is essentially a cheat sheet listing all the most common itemized deductions. There are also a number of smaller, more specialized itemized deductions that you may be eligible to claim; for a comprehensive list, check out IRS Publication 529.

Nearly everyone who itemizes will be able to claim a deduction for state and local taxes. You can either deduct the income taxes you paid to your state this year, or deduct your state sales taxes, whichever is higher. If your state charges income taxes, that's usually the better deduction to take; for income-tax-free states, you can use the Sales Tax Deduction calculator to figure out how much you can claim in sales taxes. Since you own a residence (as evidenced by your claiming the mortgage interest deduction) you'll likely also have paid property taxes during the year -- and you can deduct them as a locally paid real estate tax.

The charitable donation deduction is another common -- and potentially large -- itemized deduction you may be able to claim. You can deduct the value of both cash and property that you donate to qualified charities. Being able to deduct donations of valuable items is an especially powerful way to max out your itemized deductions, since you don't have to spend a dime to get this tax break. Just clean out your attic or your garage, give the contents to charity, and claim your deduction. 

Tax reform and itemized deductions

Both the House and Senate versions of the tax reform bill greatly increase the standard deduction, though the actual numbers are slightly different between the two bills. Both bills also change the mortgage interest deduction, although in different ways; the House bill grandfathers in existing mortgages but caps new mortgages at $500,000 instead of $1 million, while the Senate bill doesn't change the rules for mortgages used to purchase a home but eliminates the deduction for interest from equity debt (meaning refinances). And both bills eliminate many common itemized deductions, making it more difficult to beat the standard deduction. The bottom line? It's possible that you won't want to itemize in order to claim the mortgage interest deduction after 2018, so grab it while it still makes sense.