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Create A BlogMortgage Insurance (MI) will be Tax Deductible for Select Income Brackets |
Jan. 16, 2007
Categorized in: Tulsa Real Estate
Congress recently passed legislation allowing MI payments to be tax deductible for mortgages closed in 2007.
The Mortgage Insurance Fairness Act will allow homeowners with adjusted household incomes of $109,000 or less to deduct some or all of the cost of their MI premiums from their annual income on their 2007 federal tax returns.
Eligibility Parameters
• Loans closing in 2007 (January 1st – December 31st) that are required to pay private mortgage insurance, FHA Mortgage Insurance Premium (MIP) or the VA Funding Fee. Note: The legislation will be evaluated for extension into future years by Congress towards the end of 2007.
• All MI payment options are eligible for deduction under the new law. In the case of the Financed/Single Premium option, a portion of the up front premium may be deductible in the first year. If the law is extended, the remaining portion may be deductible in subsequent years. A tax advisor should be consulted to determine the actual deduction amount.
• Purchase and refinance transactions are eligible
• Eligible primary residence and second homes are permissible. Additional restrictions for investment properties apply and should be discussed with a tax advisor.
Tax benefit
• Mortgage insurance premiums will be 100% deductible for households whose adjusted gross income is $100,000 or less
• The tax benefit for households with adjusted gross income between $100,001 and $109,000 is based on the following declining scale:
|
Adjusted Gross Income
|
Percent of Deductible MI
|
|
$100,000 or less
|
100%
|
|
$100,001 - $101,000
|
90%
|
|
$101,001 - $102,000
|
80%
|
|
$102,001 - $103,000
|
70%
|
|
$103,001 - $104,000
|
60%
|
|
$104,001 - $105,000
|
50%
|
|
$105,001 - $106,000
|
40%
|
|
$106,001 - $107,000
|
30%
|
|
$107,001 - $108,000
|
20%
|
|
$108,001 - $109,000
|
10%
|
|
$109,001 or more
|
0%
|
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