Congress Passes Tax Deductibility of Mortgage Insurance Premiums

by Alex Stenback on December 12, 2006

A rare bit of good news from the beltway:  Early last Saturday morning, congress passed a "tax extender" package that included the
deductibility of mortgage insurance on new mortgages originated in 2007.  Though this is great news, and a long anticipated change, there are some restrictions, so not every homeowner will benefit.  The rules, as we understand them, follow:

  • Permits federal personal
    income tax deduction for mortgage insurance premiums
  • Applies to new originations
    only in 2007 (like many other provisions in the bill, it must be reauthorized
    for 2008)
  • Only taxpayers earning less
    than $110,000 per year are eligible for the deduction (We understand that the deduction is phased
    out for borrowers w/ incomes between $100,000 and $110,000)
  • Applies to premiums for both
    private and government (FHA,VA & RHS) insurance programs.

As with any bill, this one now heads to the President’s desk for signature, and there has been no indication of any veto action on this bill.  Will post a link to this as soon as we can dig it up at congress.org

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