Private Mortgage Insurance Itemized Deduction is Back - For Now
This is very imporant and a huge benefit for many home owners. It is another aspect of the MFDRA that was extended and it has been largely forgotten about or ognored becae the original MFDRA was passed in 2007
A time ago, we had written about the “on again and off again” itemized deductibility of private mortgage
insurance. It’s been a real saga. Let’s do a little history:
- In 2007, congress passes the Mortgage Forgiveness Debt Relief Act which allowed qualified private mortgage insurance to be wholly or partially deducted in accordance with IRS Publication 936 (subject to income restrictions).
- This benefit expired in 2011 thus punching the housing market in the gut for 2012.
- The American Taxpayer Relief Act of 2012 extended the Mortgage Forgiveness Debt Relief Act
Assuming you’re not as big of a geek as I am and don’t desire to read through the 154 page bill, there are a couple of important points pertaining to mortgage insurance deductibility that you’ll want to pay attention to. They are these:
- It retroactively allows qualified private mortgage insurance to be an itemized deduction for 2012 (again, subject to some restrictions).
- It extends the qualified and itemized mortgage insurance deduction through 2013 (again, subject to some restrictions).
So, besides from the obvious, what does this mean?
- Make sure discuss this with your CPA when filing your tax return this year (for calendar year 2012) if mortgage insurance has been a part of your life in 2012 and/or might be in 2013.
- If you’re buying a home in 2013 using conventional financing that will be privately insured, you should strongly consider using Single Premium Financed Private Mortgage Insurance. This deduction won’t be around forever so, aside from Single Premium Financed Private Mortgage Insurance typically making the most financial sense amongst the four types of private mortgage insurance, you might get additional bang for your buck if you’re itemizing deductions for your 2013 filing.
This is pretty much the most graceless and convoluted way the federal government could have handled this but at least they got it right in the end. Should you want to see mortgage insurance pricing scenarios specific to your transaction, please visit our Price my PMI section on our website.
Charles Dailey - iLoan - NMLS ID# 79048 - CA DOC, MN DOC & WI DFI - 612.234.7283
The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer's search criteria.
Comments(3)