Private Mortgage Insurance Is Now Tax Deductible!
That’s right! This totally changes the decision between whether to get private mortgage insurance or to get a piggyback loan because now, for mortgages originating in 2007, you will be able to deduct PMI as if it were mortgage interest.
Here are the caveats:
• The tax deduction applies only to mortgages that are closed in 2007. If you have a loan with mortgage insurance in 2006, you won’t be able to deduct the premiums in the 2007 tax year unless you refinance in 2007.
• There are income limits. You get the full deduction if your adjusted gross income is $100,000 or less.
• This is a one-year deal, and Congress would have to renew the deduction to make it apply for the 2008 tax year and beyond.
• If you take the standard deduction instead of itemizing deductions, the new law makes no difference to you.