9 Responses to “Mortgage insurance deduction | PMI write off”

1. Nate Turk Says:
   February 6th, 2008 at 1:51 pm

   Bob-

   I’ve received conflicting information on this so I hope you can clear it up. If a person refinances in 2008 and they need PMI (home are not appraising like they used to so PMI is becoming a bigger factor–even on refi’s) are you saying you can’t deduct the PMI when you file your taxes next year? It only applies to a “new” loan? This assumes an AGI of less than $100,000. Thanks!

2. Bob Says:
   February 7th, 2008 at 5:09 pm

   Nate
   As far as I know, yes, you can deduct PMI when you refinance. I would definitely contact your tax advisor for a definite answer for your specific situation. This deductibility is making loans with pmi much more attractive and we’ve seen most borrowers choose this option over breaking their loans into 2, with no pmi (which was the route everyone took over the past couple of years)

3. Shelly Scott Says:
   February 13th, 2008 at 5:23 pm

   Bob,

   I also have received conflicting information regarding PMI deductibility. In my specific case I closed my “new” loan (1st time home buyer) on December 28th, 2006….. my first loan payment was due February 1, 2007. During January 2008, I received information from my attorney and broker that I would be able to deduct the PMI on my 2007 taxes.

   However, much to my dismay, it appears that the law is excluding my particular mortgage because I closed 4 days before the start of 2008.

   I meet the other requirements for the deduction and was told by the IRS to check with the agency that issued the PMI contract to get the exact date it went into effect.

   I don’t want to go on a “wild goose” chase…. do I have a chance at a good outcome with this issue? (I pay $550.00 per month in PMI…. this is not a typo.)

   Thanks, Shelly

4. Bob Says:
   February 13th, 2008 at 5:35 pm

   I don’t see why it would matter when you went to closing, it’s my understanding that it is your PMI that was PAID DURING 2007 that’s eligible to be deducted. I’m not a tax advisor and am not trying to give advice to anyone… Talk with your advisor or another one if you need a second opinion. Good luck!

   If anyone has a solid take on this, please post your comments on this blog and share so we can all understand better. THANKS

5. Val Says:
   February 14th, 2008 at 8:00 am

   I bought my house in November of 2007 but I bought out the PMI at a cost of about $5500. I now will not have to make any PMI payments on my mortgage… My question is the money I paid to buy out the PMI still tax deductible?

6. Bob Says:
   February 14th, 2008 at 10:37 am

   From the IRS website (irs.gov)

   - Special rules for prepaid mortgage insurance. If you paid premiums for qualified mortgage insurance that are properly allocable to periods after the close of the tax year, such premiums are treated as paid in the period to which they are allocated.

   - Form 1098. The mortgage interest statement you receive should show not only the total interest paid during the year, but also your mortgage insurance premiums paid during the year, which may qualify to be treated as deductible mortgage interest.

   - You may be able to treat mortgage insurance premiums you paid during 2007 as home mortgage interest. The mortgage insurance must be paid in connection with home acquisition debt, the mortgage insurance contract must have been issued after 2006, and you must have paid the premiums before 2008 for coverage in effect during 2007.

   Limit on deduction. If your 2007 adjusted gross income on Form 1040, line 38 is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated.

   - Can you deduct Private Mortgage Insurance (PMI) premiums on rental property? If so, which line item on Schedule E?
   Yes, you can deduct Private Mortgage Insurance premium on line 9 of 1040 form.

   ..hope this helps!!

7. Val Says:
   February 14th, 2008 at 11:37 am

   On my 1098 I recieved from the lender it only showed the points and interest I paid for 2007. On my HUD-1 form under the 800 series it shows that I paid $5500 towards PMI during closing. No where does it show if I was pre-paying advance years or not. I know currently I am not paying any PMI and that is how my lender said it would work. I am confused I called the IRS and they didn’t seem to have a real answer to my question. So is the whole amout deductible or not? I really appreicate the help. Thank you

8. Bob Says:
   February 14th, 2008 at 11:59 am

   One would think you can and that it doesn’t matter if you pay it monthly or pay it up front… you still paid it. Pay a licensed tax person to square this away for you and give you a definite answer. good luck Val. i’d love to know what your tax person tells you… please keep in touch

9. Val Says:
   February 14th, 2008 at 2:04 pm

   I think I will take your advice I will let you know the end result… Thank you for your help.

Leave a Reply

Name (required)

Mail (will not be published) (required)

Website