On December 18, 2015, the President signed legislation that renews the tax deductibility of mortgage insurance premiums for qualified borrowers through 2016. This is great news!
The deductibility is effective for purchase and refinance transactions closed after December 31, 2014. Mortgage insurance premiums paid or accrued after December 31, 2014 and through December 31, 2016 may qualify for tax deductibility on borrowers’ subsequent federal tax returns as follows:
- Borrowers with adjusted gross incomes below $100,000 may deduct 100% of their Mortgage Insurance premiums.
- For borrowers with adjusted gross incomes from $100,000.01 to $110,000, deductions are phased out at 10% increments for each additional $1,000 of adjusted gross household income.
This becomes a great opportunity for first time and subsequent home buyers as it not only lower the down payment requirements but afford tax relief for the mortgage insurance premiums paid. Mortgage insurance premiums have also become less expensive in some cases!
Many buyers use this as an entry into housing, and later refinance out of the loan that required mortgage insurance.
Please feel invited to contact me should you have any questions!