Question:

Is private mortgage insurance now tax deductible?

Answer:

Yes, private mortgage insurance now is tax deductible for home loan purchases or refinances done in 2007 or later.

Full PMI tax deductibility applies to households with combined income of up to $100,000. Those with income of up to $109,000 get a prorated tax deduction on mortgage insurance premiums tax deduction. Those with higher income and who have their loans from before 2007 are not eligible for private mortgage insurance tax deduction benefits.

What about Tax Advantage Mortgage Insurance (TAMI) as an alternative to Private Mortgage Insurance (PMI) tax deductibility?

Actually, this is a great way to have offset the burden of PMI. For homeowners with mortgage loans signed prior to 2007 and those who don't fall in the income limit of $109,000 it might be best to use a TAMI - this is having the normal PMI required on all loans with less than 20% down payment converted into a higher rate mortgage. Since mortgage interest is greatly tax deductible, getting a TAMI might be a winning scenario to all who want to get a new home mortgage purchase or a new refinance.

The greatest disadvantage of having a TAMI is that it will stay for the duration of your loan term, or at least until a new refinance. However, odds are you will be writing off home mortgage interest partially or in full every year (consult your tax professional for specifics), so if you could afford the higher rate there's nothing to be sorry about private mortgage insurance tax deductions.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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