4. **Interest Paid:** You can only deduct the interest portion of your mortgage payments, not the principal. You will need to carefully track your interest payments throughout the year to accurately claim the deduction. The information provided in this article is intended for general knowledge and should not be taken as professional tax advice. Due to the complexities of tax laws, it's highly recommended to consult a qualified tax professional for guidance on your specific situation. Further information https://tradeprofinances.com/mortgage/is-mortgage-interest-tax-deductible-in-california/ Here's where things get interesting. Even though California doesn't offer a direct mortgage interest deduction, the federal deduction does influence your state tax burden. This is because California's income tax system is based on the federal adjusted gross income (AGI). 5. **Calculate Your Deduction:** The deductible amount of mortgage interest is the interest paid on acquisition debt up to the applicable limit, plus the interest paid on home equity debt up to the $100,000 limit. * **Itemizing your deductions** involves listing out specific expenses, such as mortgage interest, state and local taxes, charitable donations, and medical expenses. If the total amount of your itemized deductions exceeds the standard deduction, you'll benefit from a larger reduction in your taxable income. The world of tax deductions, especially those concerning real estate, is intricate. It's strongly advised to consult with a certified public accountant (CPA) or a qualified tax professional to ensure that you are taking advantage of all applicable deductions and credits. They can provide personalized guidance based on your specific financial situation and help you make informed decisions about your tax strategy. * **Debt for a home equity line of credit (HELOC):** You can only deduct the interest on the portion of the HELOC used for qualifying home improvements. Interest on funds used for other purposes, such as vacation expenses or debt consolidation, is not deductible.