Deducting PMI Premiums in 2016 – Expiring in 2017!
With Congress and the White House appearing to be deadlocked on future tax policy, the deductibility of PMI premiums are at risk.
Even if a final plan is worked out, Congress must proactively pass specific legislation to renew the deduction for tax year 2017 (and beyond?) or the deduction dies a quiet death with no party/ politician held accountable.
PMI premiums have been deductible since 2007, but the tax break final year of deductibility is tax year 2016. Only homeowners who itemize deductions to get the write-off. The deduction amount appears in the “Interest Homeowners Paid” section of Schedule A.
Homeowners should find the amount in box 4 of the IRS Form 1098, year-end loan information statement their lender sends homeowners.
Time, Occupancy Restrictions
The deduction is allowed only if the (purchase or refinance) mortgage was taken out on or after Jan. 1, 2007.
However, the mortgage insurance deduction applies to refinances up to the original loan amount, not to any “cash out” homeowners might have received with the new home loan.
Homeowners may be able to deduct private mortgage insurance payments on a second home, but qualifies only if the home is used by homeowners personally or rented out for less than 15 days a year.
Finally, while there is no statutory limit on the amount of PMI premiums homeowners can deduct, the amount might be reduced based on home owners income.
The deduction begins phasing out when a homeowner’s adjusted gross income, is more than $100,000.
The phaseout begins at $50,000 AGI for married persons filing separate returns. The PMI deduction is reduced by 10% for each $1,000 a filer’s when income exceeds the AGI limit.
The deduction disappears completely for most homeowners whose AGI is $109,000, or $54,500 for taxpayer “married” but filing separately.
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