Back in December I did a post called “The Mortgage Interest Deduction (MID) Should be Left Alone,” while that’s still up in the air, President Obama signed the bill extending the deduction for Mortgage Insurance through December 31, 2011.
Borrowers can use Mortgage Insurance (MI) to buy a home sooner and enjoy predictable payments, while benefiting by deducting the premiums from their income taxes. And MI can be canceled once the home buyer builds enough equity. MI is required on all mortgage loans that exceed an 80% loan to value.
Details on Tax Deductibility for MI Remain Unchanged
- The home purchase or refinance loan must close between January 1, 2007 and December 31, 2011;
- Household income must be at or below $100,000 for a full deduction of premium;
- The premium deduction is reduced 10% for each $1,000 of income over $100,000;
- The premium deduction is prorated in the first year based on the month the loan closes;
- Applies to primary residence and one other residence purchased for personal use by the taxpayer;
- Monthly, annual, and single MI premiums are eligible. Financed premium deductions should be taken over a seven year period.
Please consult a tax expert for more details (I recommend Kahn CPA).