New Tax Breaks for Mortgage Insurance

December 13, 2006

From an Inman News article:
Households with annual income of $100,000 or less can get a tax break on their mortgage insurance when purchasing a home in 2007.

Mortgage insusrance is a lender requirement for loans with less than 20% down payment and the premium paid was not considered a deductible expense.

However, effective January 1, 2007 a new tax deduction will allow buyers to write off the full cost of theier private mortgage insurance on their federal tax return.

"Making the cost of mortgage insurance tax deductible helps those who need it most: low and moderate income Americans, primarily first time home buyers, who are financially responsible but simply don't have the means too amass a 20% down payment," said Mortgagae Insurace Companies of America president Steve Smith ina statement this week.

The deduction applies to private and government mortgage insurance programs, such as FHA backed loans. The deduction can only be claimed for mortgage insuracne contracts between January 1 and December 31, 2007. Additional legislatin would be required to allow those who purchase mortgage insurance after 2007 to claim the deduction.