This information came stright from Realtor Magazine. Hope it is helpful
Borrowers paying a monthly mortgage insurance premium get a break under tax legislation President George W. Bush signed shortly before the close of 2006, though the break is very narrowly targeted to just a few home owners. Here's a quick look at some of the provisions of the new mortgage insurance premium deduction based on an NAR analysis:
One-year term: The deduction applies only to MI policies issued in 2007 for homes purchased in 2007. It doesn't apply to premium payments for policies issued before 2007.
Widespread Applicability: The deduction applies to private MI, and to FHA, VA, and Rural Housing Service premiums as well. The MI premium amount is to be treated as mortgage interest.
Income Eligibility: The new deduction is available only to individuals or famialies with less than $100,000 adjusted gross income (AGI) on a joint or single tax return ($50,000 for married filing separately)
Phase out: The provision phases out by 10 percent for each $1,000 of AGI over $100,000 ($50,000 for married filing separately) Thus, there is no MI deduction for individuals or famialies with AGI above $110,000 ($55,000 for married filing separately)
Premium Prepayment: Individuals who claim the deduction aren't permitted to prepay premiums that are otherwise due after 2007. The provision expires for any premium payment that's paid or accrues after Dec. 31, 2007.
Mortgage prepayment: If a mortgage (other than VA, FHA, or RHS mortgage) is prepaid during 2007, the unamortized premium balance on that mortgage isn't deductable. (The unamortized premium balance is the amount of the premium that would have been paid in a particular year If the payments had extended throughout that year.)
Notification: The home owner is supposed to receive a statement from either the lender or the MI provider stating the proper amount of the MI deduction. That information will also be provided to the IRS.
It is not known when or if the IRS will provide additional guidance for the deduction, given it's one-year authorization and limited applicability, NAR tax analysts say.
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