What You Need to Know About the Mortgage Insurance Tax Deduction

Congress extended the tax deduction for mortgage insurance for 2015 and 2016 mortgages.  In order to deduct your mortgage insurance premiums:
1 - Your household adjusted gross income (AGI) needs to below the threshholds outlined in the chart.  For example, if your AGI is $100,000 or less, you deduct 100% of your mortgage insurance premiums.  On the other hand, if your AGI is $104,500, you can only deduct 50% of your mortgage insurance premiums.  The deduction phases out completely once your AGI breaks above $109,000.

2 - Upfront MI is deductible over seven years, except:

• VA funding fee – deductible in year paid
• RHS guarantee fee – deductible in year paid

3 - The mortgage must have been used to buy, build or improve a qualified residence (primary home and/or vacation home). The deduction also applies if you are refinancing a mortgage that was used to buy build or improve a qualified residence.

PLEASE NOTE: THIS ARTICLE AND OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX ADVISOR FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION. FOR MORE INFORMATION ON ANY OF THESE ITEMS, PLEASE REFERENCE IRS PUBLICATION 936.