Yes, mortgage interest tied to a rental is generally deductible. Only the interest portion counts. Principal paydown is not an expense, and money deposited into escrow is not deductible until the servicer pays the underlying bill.
The expense-specific result is below. The shared BAR test, de minimis safe-harbor rule, and source guide live on the deductions hub so they are not repeated on every expense page.
A worked classification for mortgage interest
A $2,100 monthly payment contains $1,420 of interest, $430 of principal, and $250 of escrow. Over one month, $1,420 goes to line 12. The $430 principal is not deductible. The $250 waits until the tax or insurance bill is paid from escrow.
Records that support this treatment
Keep Form 1098, the amortization or annual loan statement, refinance closing documents, and a tracing schedule for borrowed proceeds. Reconcile the interest total to line 12 for each property.
Keep the invoice, the decision, and the Schedule E placement together. The broader rental property deductions guide and the Schedule E walkthrough cover the full return.
This is general information for organizing rental records, not tax advice. Elections, entity structure, mixed use, and the exact unit of property can change the answer. Bring the invoice and the underlying facts to a CPA before filing.