Question:

How is PMI (private mortgage insurance) tax deduction regulated?

Answer:

PMI (private mortgage insurance) tax deduction is regulated by the Tax Relief and Health Care Act of 2006. Initially, tax deductibility on PMI was available at large for 2007 only. However, PMI (private mortgage insurance) tax deduction will be available for low and moderate income homebuyers through 2010, if their loans or refinances were obtained through the 2007-2010 period.

Only households with income of $109,000 or less enjoy PMI tax deductions.

If you are filing on your own, your income can't exceed $50,000 for full tax deductibility, or $54,500 for partial PMI deduction. If you are filing jointly with a partner, the limits are respectively $100,000 to $109,000. If you earn more, no PMI tax deductibility is available.

PMI (private mortgage insurance) tax deduction is available for refinances made during the 2007-2010 period for up to the original loan amount.

Second homes enjoy tax deductible PMI premiums if they are not used as rentals.

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