- How Much Does it Save You if You Don't Use Private Mortgage Insurance on Your Refinance?
- Can My Mortgage Insurance Be Rolled Into Closing?
- Does Mortgage Life Insurance Require a Husband and Wife's Names to Be on the Mortgage?
- Can I Deduct Mortgage Insurance Premiums Listed on My 1098?
- Borrower Paid Vs. Lender Paid Mortgage Insurance
- Closing Price Vs. Appraisal Price in PMI Cancellation Rules
If you took out a mortgage to buy property and the loan was for 80 percent or more of the purchase price, your lender probably required you to buy PMI -- private mortgage insurance. From 2007 until Dec. 31, 2011, the premiums you paid on that insurance were tax-deductible. Since then, unless there is a reauthorization of the mortgage insurance deduction by Congress, you can deduct the premium only if you are amending or filing an old return.
To amend or file an old tax return reporting private mortgage insurance payments, refer to IRS Form 1098, which you should have received in any fiscal year your premium paid was at least $600. The total payments appear inside box 4. If the box is empty even though you had a PMI policy, contact the insurer for the deductible amount.
If you co-own the property bought with the insured mortgage and your partner paid any portion of the PMI premium, you may not claim a full deduction. Your tax write-off is equal only to the amount you paid with your own resources.
To claim the PMI deduction, you have to qualify for filing your taxes for that year on IRS Form 1040. You must also itemize your deductions on Schedule A. Even if you meet these two requirements, your income for the tax return’s year has to fall within the limits that apply to borrowers filing for the deduction. These limits vary according to whether you file jointly or separately, and they may have changed through the years the write-off was allowed. Check the IRS instructions that apply to the fiscal year for which you are filing to get the income limit details.
Before the PMI write-off expired, you could not claim in the current fiscal year insurance payments you made for future years. You had to wait to file the deduction in the year to which the payment applied. Additionally, the tax code gave you a maximum of seven years to claim all prepayments. It is not clear from the latest version of IRS Publication 936, which addresses the PMI deduction, whether this allowance period expired in 2011. Consult a tax accountant if in 2009, for example, you got enough mortgage deduction to provide coverage until 2015. Ask whether you will be able to claim the write-off in the years following 2011.
- Comstock/Comstock/Getty Images