What is mortgage insurance (MI) tax-deductibility and how does it work?
In 2006, a new federal law was passed making MI premiums tax-deductible for eligible borrowers on mortgages originated or refinanced in 2007. Previously, borrowers could not deduct the cost of their MI payments on their federal income taxes. In late 2007, the itemized deduction for MI premiums on federal tax returns was officially extended for three years, through 2010. The law now allows Members with adjusted gross incomes up to $100,000 to deduct 100% of their MI premiums on their 2007-2010 federal tax returns. In addition, even Members with adjusted gross incomes up to $109,000 can take advantage of a partial MI deduction on their 2007-2010 federal tax returns (the legislation includes a phase-out by 10% for each $1,000 a taxpayer’s adjusted gross income exceeds $100,000 with a cutoff of any deduction at $109,000). * The legislation is effective for MI certificates issued through 2010.
