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Tuesday, February 8, 2011

MORTGAGE INSURANCE: DON'T FORGET THE TAX DEDUCTION!!!

By JC Leahy, MA Accounting

The itemized tax deduction for mortgage insurance premiums is easy to forget..  Within certain limits, you may count their cost as mortgage interest. Mortgage insurance is special insurance that you might have to buy to get a mortgage..  You pay the insurance premium but the insurance's beneficiary is your mortgage lender.  If you default, the mortgage insurance company will make sure that the mortgage lender doesn't lose.  Generally, mortgage lenders require mortgage insurance if you can't make a 20% down payment or if there are other circumstances that make the mortgage lender cautious.

The cost of mortgage insurance premiums will probably be reported to you by your mortgage lender in your annual Form 1098 Mortgage Interest Statement, in Box 4.  Mortgage interest provided by the Department of Veterans Affairs (VA), the Federal Housing Administration (FHA), the Rural Housing Service (Rural Housing), and private mortgage insurers is deductible.

The limitation is that if your adjusted gross income exceeds certain levels, your mortgage insurance deduction phases out to zero.  For married couples, the AGI phase out range is $100,000 to $109,000.  For all others, the range is $50,000 to $54,000.

For help with your taxes, contact:

JC Leahy, MA Accounting
Maximum Legal Refund (TM)
"Taxes Minimized to Your Best Advantage" (TM)
JC Leahy and Company, LLC
Silver Spring, Maryland
Tel.: (301)537-5365

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