Ring in 2007 with a new tax deduction!
Before Congress turned off the lights and went home for the holidays, it approved a new tax break for who plan to buy a home in 2007. The tax break, tucked into the omnibus tax bill, will let home buyers deduct mortgage-insurance premiums on their tax returns.
While this is great news, there are some conditions.
First, it is only on new loan transactions closed after January 1, 2007. So everyone who already is paying mortgage insurance will not gain any deductibility. (You can refinance an existing loan, and get the deductibility provided you do not take any cash out in the transaction.)
Second, the deduction was only approved for 2007, like many tax breaks they are temporary and not permanant. This is unless Congress extends it. So write your congressmen and let them know you would like it extended.
Third, it will help lower and middle income borrowers. The full deduction is limited to homeowners with adjusted gross income of $100,000 or less. There is a partial deduction on adjusted gross incomes up to $110,000.
Here are some great links to read more:
http://www.mgic.com/education/mioptions_tax.html
http://www.pmi-us.com/tax/index.html
Some basic’s on PMI can be found here:
http://www.frbsf.org/publications/consumer/pmi.html
