Brian Hatleberg, an ERA Mortgage Advisor and colleague, provides us with some information regarding PMI and tax deductibility.
“I thought that, since we’re approaching tax time (and spring, not that I’m paying attention…), it might be a good time to get some information out there on PMI and tax deductibility. At first, it doesn’t sound so exciting to say that Congress recently extended some legislation, and private mortgage insurance (PMI) premiums are now tax deductible through 2011. But this is a big deal.
Why? Well, PMI can help people buy a home sooner, by enabling them to put less than 20% down. This increase in purchasing power can sometimes be the difference between affording the home of your dreams…or not. The deductibility of PMI this year will give some buyers just that little extra boost that will help them pull together a home purchase. And, since many people don’t stay informed on these things, it’s our job to make sure they’re aware!
In addition, this deduction is not just for first-time homebuyers, so it can be used by current homeowners looking to upgrade to a new home. However, it does only apply to “qualified” residences, which typically include a primary residence and a vacation home, but not an investment property. There are also some caveats — PMI is only tax deductible for homeowners with adjusted gross incomes of less than $110,000…and, of course, borrowers should consult their tax advisor with questions.”