- Can I Deduct PMI Mortgage Insurance on My Taxes?
- Can I Claim State Sales Tax Deduction if I Do Not Pay State Income Tax?
- How Much Will Homeowner's Insurance Cost on Top of a Mortgage?
- The Advantages of Itemizing Federal Taxes
- Can I Deduct My Mortgage Interest Even if I Didn't Work During That Year?
- How to Report RMD Donated to a Charity on a Tax Return
The mortgage insurance deduction expired on December 31, 2011. You may still be able to take advantage of it if you got a filing extension on your 2011 taxes, or if you need to amend or file an older return. It's also possible that Congress will act to renew this deduction in the future.
Qualified Mortgage Insurance
If you got a loan for more than 80 percent of a house’s value to buy a home or refinance a mortgage, you also probably had to buy mortgage insurance to protect the lender against default. Your payments for the year were reported to you on IRS Form 1098 if they totaled $600 or more. You were able to claim your mortgage insurance premiums as income deductions if you bought the policy between 2007 and the expiration date of the tax write-off. Form 1098 shows your total payments for a given year in box 4.
Shared Responsibility, Shared Benefit
If you shared the responsibility of paying for mortgage insurance with one or more partners, you may not take its full cost as a tax write-off when you amend a past tax return or file a late one. Your allowed deduction is only the portion of the premium you paid.
You may only deduct your mortgage insurance payments if you itemize your eligible expenses for the applicable tax year in IRS Form 1040, Schedule A. As you read the instructions for Schedule A, you will see that income limits apply to homeowners making this claim based on whether they are amending or filing their tax return jointly or separately. Since the income cap may have changed from year to year, refer to the instructions that apply to your tax return’s year.
When the mortgage insurance deduction was in force, homeowners who paid premiums for future years in advance were not allowed to claim the expense in one single fiscal year. They could only deduct the portion that applied to the year of each tax return. In addition, the IRS gave taxpayers a maximum of seven years to claim all prepayments. If you paid for more than 84 months of coverage in advance, you couldn’t claim amounts that applied for years in excess of seven. Besides, if you paid off your mortgage before you had deducted all your insurance prepayments, you forfeited your right to claim the amount that remained unclaimed.
- Mortgage application image by haveseen from Fotolia.com