PMI is Tax Deductible in 2007

Why are people made to pay Private Mortgage Insurance? Homeowners who finance a property at more than 80% loan to value on a first deed of trust are required to pay a Private Mortgage Insurance premium along with the monthly base mortgage payment. The only exception to this is if a second deed of trust is carried behind the 80% (or lower) first mortgage. Private Mortgage Insurance (PMI) protects the lender if the buyer defaults on the loan. Until now, PMI has been an extra monthly expense and can be difficult to deal with. Here’s good news! Congress passed legislation making PMI tax deductible in some cases.

Here are answers to a few basic questions:

Why is PMI insurance now tax-deductible?

Congress recently passed legislation that allows mortgage insurance premiums to be tax-deductible on loans originated for transactions beginning Jan. 1, 2007.

Who is eligible for the PMI deduction?

Borrowers with household adjusted gross income of $100,000 or less purchasing a home in 2007 will able to deduct the full cost of the mortgage insurance they pay during the 2007 tax year.

How does the PMI tax deduction work?

Just as the interest payments on a mortgage are tax-deductible, borrowers will now be able to deduct the mortgage insurance portion of their payment as well. Their lender will provide them with a year-end statement reflecting the total mortgage insurance premium paid.

How much of the PMI premium can be deducted?

Borrowers with household adjusted gross income of $100,000 or less will able to deduct the full cost of the mortgage insurance they pay during the 2007 tax year.
www.TheMMTeam.com