Homeowners Take First-Ever Tax Deduction for Mortgage Insurance

Many qualified taxpayers are preparing to claim their first-ever tax deduction for mortgage insurance premiums on home loans that closed in 2007.

The tax deduction was first approved by Congress in late 2006 and applied to loans with mortgage insurance that closed in 2007. In an important move to further assist borrowers, Congress voted in December of last year to extend the mortgage insurance tax deduction through 2010. Extension of the tax deduction for mortgage insurance premiums was part of the Mortgage Forgiveness Debt Relief Act of 2007.

The deduction allows households with an adjusted gross income of $100,000 or less to deduct the full cost of their government or private mortgage insurance premiums on their federal tax returns. Families with incomes between $100,000 and $109,000 are eligible for a reduced deduction.

“For the first time, many low- and moderate-income families who purchased homes with private or government mortgage insurance, will be able to deduct those premiums when they file their 2007 federal tax returns next month,” said Kevin Schneider, President of the Mortgage Insurance Companies of America (MICA). “On average, this year’s tax break could be worth $350 per taxpayer -- an annual deduction that qualified homeowners can take each year through 2010.”

“Even with home prices declining, many families still find it difficult to accumulate a 20 percent down payment,” said Suzanne Hutchinson, MICA’s Executive Vice President. ”Low down payment insured loans are a key financial tool in the overall effort to keep the dream of homeownership alive in a volatile market.”

'Most are better off because the risky, exotic loans have largely disappeared from the market,” said Bruce Hahn, President of the American Homeowners Grassroots Alliance. “They are also fortunate because more secure loans with tax deductible private and government mortgage insurance are still available for qualified borrowers.'

'Many low- and moderate-income families moved a step closer toward realizing their dream by purchasing a home last year,” said Melanie Campbell, Executive Director/CEO of the National Coalition on Black Civic Participation. “Now those qualified low down payment buyers with government or privately insured mortgages will get a bit of tax relief for the first time by deducting those premiums when they file their federal taxes next month.'

“When Latinos file their federal taxes next month, many who bought homes last year will be writing-off premiums for government or private mortgage insurance for the very first time,' said Timothy Sandos, President and Chief Executive Officer of the National Association of Hispanic Real Estate Professionals. “Like many other populations, our community relies on homeownership to build wealth. Government and privately insured mortgages help low- and moderate-income families gain a foothold in the housing market and realize their piece of the American Dream.”

For more information about the new deduction visit http://www.privatemi.com.

CONTACT: Jeff Lubar of the Mortgage Insurance Companies of America, +1-202-682-2683, jeff@micadc.org