PMI deduction extended

As I mentioned in my last post, I am providing an update on some of the latest laws passed relating to home ownership.

Today the topic is PMI: private mortgage insurance. PMI is required as part of your monthly payment to the mortgagor when you did not put down 20% or more in the purchase of your home. The insurance is to cover the mortgagor---not yourself.

The good news is that Congress voted to extend the deductibility of PMI premiums until January 1, 2010. If your adjusted gross income is below $100,000, you are eligible for a full deduction; it is phased out after your adjusted gross income is above $110,000. You also had to purchase your home after 2006.

If you have any questions, it is best to talk to your tax expert. I know enough to tell you to talk to someone who knows all the details! I hope this information points you in the right direction. Good luck on your tax filing this year.....

A one year tax break for 2007 homebuyers

Although it is considered to have limited applicability, the President signed in new legislation that gives some home buyers another tax break this year. The deduction allows borrowers paying a monthly mortgage insurance premium to treat the amount as mortgage interest.

However, there are several qualifiers.

The provision only applies to mortgage insurance policies issued in 2007 for homes purchased in 2007.

The deduction is only available to people with less than $100,000 in adjusted gross income on a joint or single tax return ($50,000 for married filing separately). The provision phases our by 10% for each $1000 of adjusted gross income over $100,000, so there is no deduction for individuals or families with adjusted gross income above $110,000.

The home owner is supposed to receive a statement from either the lender or the mortgage insurance provider stating the proper amount of the deduction. To find out if this provision applies to you, speak to your tax specialist.