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The Mortgage Insurance Tax Deduction Lives On

Alerus | MAR 07, 2018

Are you one of the millions of home owners who pay mortgage insurance premiums on a conventional, FHA, or VA loan? If you are, the massive budget bill recently signed into law could be your friend.

That’s because the bill revives the tax deduction for private mortgage insurance (PMI) for 2017. The PMI deduction, which had existed for over a decade, expired in 2016, but now it’s been resurrected. 

The new bill allows home owners to deduct PMI paid in 2017, although it does not say anything about 2018 and beyond. 

More than 4 million people deducted their mortgage insurance in 2015, the most recent year for which numbers are available, with the average deduction coming in at more than $1,500. 

There a two requirements homeowners must meet in order to take advantage of the PMI tax deduction. First, the home that is secured by the mortgage must have been your primary residence during the year – it can’t be a vacation home or an investment property. And second, your adjusted gross income must be less than $100,000 in 2017. If you meet these two criteria, then you may be able to utilize the deduction.

Now that you know the PMI deduction has been revived, make sure to bring up this topic with your accounting professional.

Other Tax Provisions to Keep an Eye On
Two other tax code features have also been brought back to life for 2017 filings:

  • Mortgage debt forgiven by lenders in 2017 in connection with short sales, foreclosures and loan modifications will not incur the usual harsh tax treatment that other cancelled debts receive. This can be a great benefit for those who struggled with job loss, medical expenses or couldn’t pay their mortgage for other reasons. 
  • You may receive a tax credit of 10 percent of what you spend on energy-saving improvements to your home in 2017. Examples include energy-efficient windows and door, insulation, and roofs. 

So be sure to get in touch with your CPA or tax preparer today to talk about whether you could take advantage of these recently revived tax benefits. 

Alerus Financial, N.A., does not offer tax or legal advice. Please consult your tax or legal advisor to determine how this information applies to your unique situation.
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