For millions of moderate-income home buyers, there’s an important money-saving question looming in 2017: Will Congress reinstate deductions for mortgage insurance premiums as part of its overhaul of the federal tax code?
The authorization for this benefit to middle-income owners expired on Dec. 31, 2016. As a result, it will not be available for borrowers during 2017 and beyond unless reauthorized through congressional action.
Mortgage insurance premiums are charged by lenders when borrowers make a down payment of less than 20%.
Here’s a quick review on how the mortgage insurance premium deduction works under current law, which probably won’t change if it’s reauthorized: You can write off 100% of your premium payments each year if your adjusted gross income is $100,000 or less ($50,000 or less for single filers). If your income is $109,000 or less, you get to deduct only a portion of your premium payments using a phase-down schedule available from the IRS (source: The Washington Post.com).
Information courtesy of Bill Holmes with Front Street Mortgage