Question:

Do I have mortgage insurance premium tax deduction for 2007?

Answer:

Yes, mortgage insurance premium (MIP) tax deduction for 2007 is available to homeowners who purchased a first or second home in 2007 and qualify under the income limit of up to $109,000 for joint filers ($54,500 for individuals).

MIP/PMI tax deductions for 2007 were enacted with the Tax Relief and Health Care Act of 2006; since then the MIP/PMI tax deductibility has been extended through 2010.

Mortgage Insurance Premiums Tax Deduction Limitations

You can't deduct MIP/PMI payments on second home used as a rental. Only owner-occupied vacation homes are eligible.

According to IRS rules MIP/PMI tax deduction on refinance transactions is possible. However, the deduction will be calculated on the original mortgage loan amount, if the refinance loan is bigger than the original one.

Individuals with adjusted gross income between $50,000 and $54,500 or couples filing jointly with income between $100,000 and $109,000 are a subject to a reduction in the MIP/PMI tax deductions. The reduction is 10% for every $1,000 over of the applicable income limit for full MIP/PMI tax deductibility.

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