It may be possible for you to deduct that hated mortgage insurance for tax year 2007.
If your adjusted gross income is less than $110,000 and you originate a mortgage or refinance your home during 2007, mortgage insurance (PMI) is deductible when you complete your 2007 tax return a year from now.
PMI usually is required if the mortgage is more than 80 per cent of the value of the home. Some people wanting a small downpayment avoid mortgage insurance by getting two loans, one for 80 per cent and another for 10% or 15%. But under this new tax law, PMI can be deductible and it may cost less in the long run to take one loan rather than two. After all, PMI can be cancelled if the value of the home increases and the loan amount is less than 80% of the home's value.
It is worthwhile for you to consult with your mortgage advisor before deciding how best to finance a mortgage of more than 80% if the income limitation apply to you.
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