Private Mortgage Insurance (PMI) – Tax Deduction Update

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Here is my second stock photo attempt, just in time for tax season. This one didn't require any expensive props either but I did have to use my son's glue stick to hold the sheets together. Feel free to use this image, just link to www.SeniorLiving.Org

There had been threats that buyers who put less than 20% down for their mortgage would no longer be able to deduct the Private Mortgage Insurance (PMI) portion of their mortgage payment when filing their federal tax return.  That can easily lower the buyer’s itemized deductions by up to $1800.00

Good News to Share!

A notice from John Adams Mortgage Company provides clarification:

On 12/18/2015 the President signed legislation that renews the tax deductability of mortgage insurance  premiums (AKA, PMI) for qualified borrowers through 2016. As always, please check with your tax adviser.

The deductability is effective for purchase and refinance transactions closed by 12/31/2014.  Mortgage insurance premiums paid or accrued after 12/31/2014 and through 12/31/2016 may qualify for tax deductability on borrowers’ subsequent federal tax returns as follows:

  • Borrowers with adjusted gross income below $100,000 may deduct 100% of their mortgage insurance program.
  • For borrowers with adjusted gross income  from $100,000.01 to $110,000 deductions are phased out at 10% increments for each additional $1,000 of adjusted gross household income.

Hopefully you will find this news helpful when filing your 2016 tax returns.

As always, if you are ready to buy – I’m ready to help you do so!

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