Real Estate and Home Mortgages - Pmi
Doityourself.com community forum was created to provide answers to all questions related to home improvement and home repair. Doityourself community can help you find information about how-to topics on small fixes to large remodeling projects. With comprehensive how-to content and expertly moderated community forums DoItYourself.com makes it easy to tackle even the most complex home improvement projects.View Full Version : Pmi
bogey
05-08-07, 04:51 PM
Does anyone know if PMI on a new loan is tax deductible in the same manner that interest expense on a home mortgage is tax deductible?
Thanks
Thanks
Family Guy
05-09-07, 09:05 AM
Mortgage insurance is tax deductible now, **with the following conditions** ("at least" these conditions, I should say):
--The loan must have originated (closed/funded) in 2007. If you funded on Dec 31, 2006, you are not included.
--MI is tax deductible based on your income (spouse included). If your total income is up to but NO HIGHER than $100,000 you can deduct 100% of it.
For every $1-1000 above $100,000 you deduct 10% less.
100,001-101,000 deduct 90%
101,001-102,000 deduct 80%
...and so on until there is no deduction at all for $110,000 income.
With a purchase transaction, this is pretty cut and dry. The big questions that are out there have to do with refi's. With a refi, you can deduct a percentage of that allowable percentage, based on how much of your loan was paying off your current mortgage---you do not deduct for the amount of any cash out you may have received, probably including rolling into the loan any closing costs and other settlement fees.
So, if your loan was for 100,000 but you got 10,000 cash out, your deduction is based on 90,000 of that loan, not the full 100,000 since you got cash. Then apply how much of a deduction you get based on your income, as I mentioned above.
Talk to your tax advisor for more specific info. You should get a year end statement from your mortgage lender next January, along with your interest statement for your tax purposes.
--The loan must have originated (closed/funded) in 2007. If you funded on Dec 31, 2006, you are not included.
--MI is tax deductible based on your income (spouse included). If your total income is up to but NO HIGHER than $100,000 you can deduct 100% of it.
For every $1-1000 above $100,000 you deduct 10% less.
100,001-101,000 deduct 90%
101,001-102,000 deduct 80%
...and so on until there is no deduction at all for $110,000 income.
With a purchase transaction, this is pretty cut and dry. The big questions that are out there have to do with refi's. With a refi, you can deduct a percentage of that allowable percentage, based on how much of your loan was paying off your current mortgage---you do not deduct for the amount of any cash out you may have received, probably including rolling into the loan any closing costs and other settlement fees.
So, if your loan was for 100,000 but you got 10,000 cash out, your deduction is based on 90,000 of that loan, not the full 100,000 since you got cash. Then apply how much of a deduction you get based on your income, as I mentioned above.
Talk to your tax advisor for more specific info. You should get a year end statement from your mortgage lender next January, along with your interest statement for your tax purposes.
WillK
05-09-07, 09:14 AM
Whoa, where'd that come from? That works out great, and I had no idea... We just bought a new home this year, and I took a loan with PMI over a sub-prime that didn't but had higher interest and higher payments... That's great!
bogey
05-09-07, 11:34 AM
What a great and thorough answer family guy. THANK YOU
Family Guy
05-09-07, 02:35 PM
Glad to help!
I can't believe a bigger deal hasn't been made of this. Our industry has fought for this for YEARS, but it's always been rejected. This was a large victory.
I can't believe a bigger deal hasn't been made of this. Our industry has fought for this for YEARS, but it's always been rejected. This was a large victory.
DIYaddict
05-09-07, 03:05 PM
Family Guy,
This IS great news! :)
Ya know... I've been told verbally about this but I can't find the info on the IRS page. I'm sure it's there somewhere!...right?
Also, this new news for PMI deduction is good only for THIS year, 2007 right? Either I'm hearing too many different things or reading the wrong stuff. :o
This IS great news! :)
Ya know... I've been told verbally about this but I can't find the info on the IRS page. I'm sure it's there somewhere!...right?
Also, this new news for PMI deduction is good only for THIS year, 2007 right? Either I'm hearing too many different things or reading the wrong stuff. :o
Family Guy
05-09-07, 03:35 PM
It's "for 2007" but it's really here to stay. Things like this get renewed every year is what we're told.