Uncle Sam is now going to help you pay your mortgage insurance premiums!
Mortgage insurance is typically required when home buyers purchase a new home with less than 20 percent down.
The newest tax legislation allows taxpayers to deduct premiums paid for mortgage insurance. Mortgage insurance premiums typically range from $50 to $150 per month, which could mean a $600 to $1,800 deduction on your tax return.
This deduction is only available to taxpayers who itemize, but many home owners (especially if you’ve just purchased your home) have enough mortgage insurance, real estate tax, and other deductions to itemize.
Prior to this tax law, only the interest paid on a mortgage was deductible.
This deduction won’t help everyone. The deduction will be limited to taxpayers with adjusted gross income below $110,000.
Finally, you’re out of luck if you are already paying mortgage insurance. This deduction will only apply to mortgage insurance contracts issued in 2007, and it’s set to expire on December 31, 2007.
For more information on the mortgage insurance premium deduction and the tax law, please visit:
https://www.mercurynews.com/mld/mercurynews/business/personal_finance/16217445.htm
HI,
The ” PMI Insurance: New Tax Break” article is very intresting. I am soon to become a homeowner & was wondering in the case of having a closing this week (12/29/06) would I qualify for this tax break?
Thanks,
Alex
Alex – the tax PMI deduction isn’t effective until 2007, so if you closed on your new house in 2006, it appears that you will not be able to take the deduction. Hopefully you closed a few days late, or even better, you were able to avoid PMI!