“I heard that mortgage insurance is now tax deductible. Is that true?”
***ANSWER:
Yes and no.
(Quick background: If you buy with less than 20% down, some loans require you to pay mortgage insurance monthly or at closing. This MI insures the lender against loss in case you default.)
As part of the Tax Relief and Health Care Act of 2006, Congress passed a law that if you buy a home in 2007 and get a loan with mortgage insurance, the insurance is tax-deductible for the 2007 tax year ONLY. To be eligible, your combined household income must not exceed $100,000.
So lets review:
– Loan for home purchase in 2007 only
– Deductible in 2007 only
– Combined household income $100,000 or less
Its a step in the right direction, but very limited. Hopefully this law will be extended past 2007, but there is no guarantee.
As always, please consult your tax professional.
