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Mortgage insurance premiums have been tax deductible for many homeowners since 2007 as part of an early incentive bill that aimed to encourage buyers to get into the stumbling real estate market at that time.
In December 2006 the 109th Congress passed, as part of a broader tax break renewal deal, a mortgage insurance premiums tax deduction that is now due to expire at the end of 2011.
Originally, the tax deduction would cover any owner occupied home that required either private or FHA mortgage insurance. Typically mortgage insurance is required on any Government insured loan or conventional loan with greater than 80% loan to value.
The tax deduction is available to tax payers, paying mortgage insurance premiums on a primary residence, that itemize deductions on their tax return.
2007 – 2011 Mortgage Insurance Deduction Income Guidelines
In addition to a tax payer having to itemize their deductions, there are also income guidelines that must be met.
The amount you may deduct is limited if your adjusted gross income is more than $100,000 ($50,000 if married filing separately). No deduction is allowed if your adjusted gross income is more than $109,000
It’s not too late to claim credit?
If you have paid mortgage insurance on your primary residence and you have not been taking this deduction, you should really speak to a tax professional about possibly filing amended returns – that could be a nice chunk of change!
Although your tax preparer may charge a nominal fee to file the addendums, the IRS allows you to amend returns as far as 3 years back. Here is a link to the IRS website, and more specifically the page that specifically addresses filing amended tax returns,
We’re keeping a close eye on this. An extension similar to what we saw with FHA loan limits would go a long way toward helping the housing market recover.
Should this tax deduction be extended, I think it would play an important role in the motivation of home buyers in 2012.
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