Sunday, January 7, 2007

Private Mortgage Insurance Now Tax Deductible

On December 20, 2006, private mortgage insurance (PMI) premiums became tax deductible. PMI is like a monthly fee you pay when you can't put a down payment of 20% of the home's value. It's not really a fee, of course - it's officially default insurance (statistics show that people unable to put 20% down are more likely to default on a loan.) It can run anywhere from $50 to $100 a month for most people (.5% of the home price, I think) and can be cancelled once you've reached 20% equity in your home.

The Bad News:

-The deduction will expire at the end of 2007 (though Congress has the
option to extend it).

-It's only available to homeowners whose adjusted gross income is less than $100,000.

-It's only available to mortgages issued after Dec. 31, 2006.

The Good News:

-Existing mortgages may qualify if the owner refinances, as long as the
amount being refinanced doesn't exceed the amount of the original loan.

Articles about the new & improved tax deductible PMI:

Brandenton Herald


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