Q. I don't own a home yet but I know you can deduct the mortgage interest from your income taxes. Is there a limit as to the amount of interest you can write off each year, or can you deduct the entire amount? Let's say I have a loan for $200,000 at 6.5% for 30 years and the interest for the first year is $13,114. Can I deduct the entire $13,114, or can I only deduct a portion of it?

A. The federal government allows you to deduct every cent of the interest you pay on up to $1 million in debt. You can also deduct your property taxes from your income. If you paid discount points when you got your mortgage, those are deductible, too, as discount points are nothing more than pre-paid interest.