If I choose to pay a larger chunk into my principal say every 6 months, does the extra money I pay into it become tax deductible, or how does it affect my taxes in general. Also, I'm self employed if that accounts for anything...

I'm in the United States.

Thanks in advance!


If the mortgage is against your primary residence, then the only part that's (probably) deductible is the mortgage interest. If you pay down your loan principal faster, then all other things being equal you'll get less of a tax deduction, because you'll accrue less interest in the months after you throw a big chunk at the principal (the principal is less, so the interest is less).

But don't worry; that's all right! It's a tax deduction, so your actual tax savings will be only a fraction of the interest you paid, so at the end of the day you'll be saving yourself money.


As mbhunter said, extra payments of principal don't affect your taxes (except to the extent that you'll pay less interest, because the amount you owe interest on - the total balance/principal - is smaller). If you want to reduce your taxes, you might pay into an IRA instead.

  • In an annoying redesign, the IRS updated their web site breaking links that has worked for years. I updated your link to one that works now, if someone has a better IRA reference at IRS.gov, they are welcome to update/edit. – JTP - Apologise to Monica Apr 22 '13 at 23:35

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