Question:

Is mortgage insurance tax deductible and how exactly?

Answer:

Mortgage insurance is tax deductible for the moment.

No matter if it is government or private, it is tax deductible for low to average income households.

Mortgage insurance premiums on government-backed loans (HUD, FHA) may be partially refundable, depending on when the mortgage was taken. Go to the official HUD website and enter your FHA mortgage number on the MIP refund section to see how a mortgage insurance (MIP) refund will apply to you.

When is private mortgage insurance (PMI) tax-deductible?

Private mortgage insurance (PMI) is fully tax-deductible for households with income of up to $100K. For incomes up to $109,000 PMI deductions will be prorated. There is no mortgage insurance tax deduction for higher income borrowers.

Also, PMI tax deductions apply for new mortgage loans and home refinances only - signed in or after 2007, until 2010. Private mortgage insurance tax deductibility gives consumers a choice to use a PMI or a second mortgage for greater tax deduction benefits.

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